GST 2025 rollout emerges as cornerstone of India’s structural reform story: Economic Survey 2025-26

Nearly eight years after its rollout, the Goods and Services Tax (GST) has emerged as one of India’s most consequential structural reforms, reshaping the indirect tax landscape and strengthening the economy’s formal foundations, the Economic Survey 2025–26 said in its annual report on Thursday.

Introduced on July 1, 2017, the GST framework replaced the fragmented system of central and state levies with a unified, destination-based tax framework with simplified tax slabs of 5%, 18%, and 40%. While the initial rollout was marked by compliance challenges and revenue uncertainty, the Survey underscores that successive reforms have steadily improved the system’s efficiency, buoyancy and credibility.  

The Survey’s preface highlights that the government carried out “the most radical overhaul of the Goods and Services Tax since its inception in 2017” during 2025, placing GST reforms alongside major policy actions such as labour code notification and sectoral liberalisation. These changes, it notes, have contributed to stronger macroeconomic performance despite adverse global conditions.

Expanding tax base

According to the survey, GST has played a critical role in formalising the economy, expanding the tax base and improving compliance through technology-driven enforcement. Measures such as e-invoicing, tighter input tax credit (ITC) rules and data analytics have reduced leakages and curbed evasion, resulting in more stable revenue mobilisation for both the Centre and states.

The survey also credited GST for accelerating national market integration. By dismantling inter-state tax barriers and check-posts, the system has lowered logistics costs, reduced transit times and improved supply-chain efficiency. The seamless flow of input tax credit across states has reduced cascading taxes, enhanced price transparency and improved competitiveness, particularly for organised manufacturing and services firms.

Fiscal standpoint

From a fiscal standpoint, the Survey links strong GST collections to the Centre’s ability to pursue credible fiscal consolidation while maintaining high levels of capital expenditure. Robust indirect tax mobilisation has supported government finances at a time when global investors are increasingly focused on general government deficits and debt sustainability. The Survey argues that such revenue stability enhances India’s policy credibility and strengthens macroeconomic buffers.

The report also situates GST within a broader institutional transformation driven by Digital Public Infrastructure (DPI). GSTN’s integration with banking systems, logistics platforms and compliance databases is cited as an example of how technology-enabled governance can raise efficiency while reducing discretionary intervention. This shift, the Survey suggests, is critical for improving ease of doing business and reducing compliance friction over the long term.

At the same time, the Survey implicitly acknowledges that the GST framework remains a work in progress. It points to the need for further rate rationalisation, dispute resolution reforms and administrative simplification, particularly to ease the burden on micro, small and medium enterprises. Predictability and stability, rather than frequent rule changes, are flagged as the next phase of reform maturity.