Nine years of GST: Experts call for litigation and compliance reforms

As GST completes nine years, the Centre highlights stronger revenues and wider tax coverage, while experts seek reforms to reduce litigation, simplify compliance and ease working capital pressures

As the Goods and Services Tax (GST) completes nine years on July 1, the Centre on Tuesday highlighted the indirect tax regime’s role in formalising the economy, expanding the taxpayer base and strengthening revenue collections, while tax experts said the next phase of reforms should focus on reducing litigation, simplifying compliance and easing working capital constraints.

 

In a note marking nine years of GST, the government said the number of registered taxpayers has more than doubled to 1.65 crore from 66.5 lakh at the time of the tax’s rollout in July 2017. Gross GST collections have also increased from Rs 7.4 trillion in 2017-18 to Rs 22.08 trillion in 2025-26, with collections of about Rs 4.37 trillion recorded in April and May this fiscal.

 

The government said GST has replaced a fragmented indirect tax structure with a unified national tax regime, supported by technology-driven reforms such as e-invoicing, e-way bills and digitised return filing. It also highlighted the implementation of GST 2.0 last year, which rationalised tax rates and sought to simplify compliance.

 

Experts, however, said that while GST has matured into a stable revenue-generating system, several structural issues continue to affect businesses.

 

“Businesses, especially in the services sector, operating across multiple states continue to face a structural challenge under GST, as excess input tax credit (ITC) accumulated in one state cannot be utilised to offset the cash tax liability of registrations in another state. The government should explore a mechanism to address this issue,” said Pratik Jain, Partner, Price Waterhouse.

 

Jain added that the revised rate structure under GST 2.0 has also resulted in inverted duty structures in sectors such as pharmaceuticals and FMCG, leading to the accumulation of unutilised ITC and blockage of working capital. “Going forward, the government’s focus should be on simplifying the legislation, improving ease of doing business and providing relief from working capital blockages,” he said.

 

Abhishek Jain, Partner at KPMG, said the inverted duty structure remains one of the biggest unresolved issues under GST. He added that the government should work towards bringing petroleum products, electricity and real estate within the GST framework to enable seamless credit flow and reduce tax cascading. He also suggested that the GST Council consider allowing businesses with multiple state registrations to be covered under a single audit and assessment process to reduce the compliance burden.

 

Saurabh Agarwal, Tax Partner at EY, said the next phase of GST reforms should focus on reducing litigation and improving certainty for taxpayers. He said the law should expressly prohibit multiple proceedings by different tax authorities on the same issue and tax period, while also introducing a structured arbitration mechanism for non-fraud GST disputes and allowing taxpayers to revise GST returns to correct bona fide errors.

 

The government, in its note, said GST has evolved continuously through legislative, administrative and technology-driven reforms over the past nine years and remains a key pillar of India’s indirect tax framework. Experts said addressing the remaining structural gaps would make the tax regime more predictable, efficient and business-friendly.