Nine years of GST: Experts call for shift from expansion to simplification in next reform phase

As India marks nine years of the Goods and Services Tax (GST) on July 1, policymakers and tax experts say the country’s biggest indirect tax reform has entered a new phase, moving beyond implementation and formalisation towards simplification, structural refinement, and greater certainty for businesses. 

Marking the occasion, Finance Minister Nirmala Sitharaman’s office posted on X that GST reforms have strengthened India’s growth journey through a simpler, more transparent, and citizen-centric indirect tax system, easing the burden on essential sectors while improving both ease of living and ease of doing business. 

Tax experts, however, note the next decade of GST will depend on resolving structural bottlenecks that continue to weigh on investment, compliance, and competitiveness. 

Nine years after the rollout of GST, India’s indirect tax regime is being viewed as a landmark structural reform that unified the country’s fragmented tax architecture, widened the tax base, and accelerated formalisation of the economy. Yet, industry specialists argue that the next phase of reform must focus less on expansion and more on simplification. 

According to Nitin Vijaivergia, Partner at Price Waterhouse & Co LLP, GST has reached a stage where policy attention should move from stabilisation to structural refinement. 

He says that sector-specific challenges remain pronounced. Manufacturing companies continue to face blocked input tax credit (ITC), inverted duty structures and classification disputes. Real estate remains outside a fully seamless credit chain because of the coexistence of GST and stamp duty while the Banking, Financial Services, and Insurance (BFSI) sector continues to grapple with complex ITC apportionment due to exempt financial services. Service businesses, meanwhile, continue to face place-of-supply complexities, multi-state registrations and cross-charge compliance obligations. 

Next phase of GST reforms 

The next phase of GST reforms should prioritise broadening the tax base by bringing more sectors under GST and reducing exemptions, Vijaivergia tells Fortune India. He advocates rationalisation of tax rates to minimise classification disputes and inverted duty structures, alongside restoring a seamless input tax credit framework. 

Other priorities include reducing procedural compliance requirements, increasing automation, lowering litigation through clearer legal provisions and faster issuance of guidance, and improving refund timelines. Greater use of technology and data analytics for non-intrusive compliance, along with stronger Centre–State coordination, would further improve ease of doing business. 

He describes the current phase as "GST 2.0", which has made encouraging progress on rate rationalisation but now needs to move toward structural reforms including seamless ITC, faster dispute resolution, broader tax coverage and greater policy certainty. 

Among the unresolved pain points, Vijaivergia highlights increasing conditionality around ITC, where credit eligibility is often affected by supplier compliance and procedural timelines. Inverted duty structures continue to impact working capital in several sectors. 

Capital-intensive industries such as data centres and advanced manufacturing also face challenges due to blocked construction credits that weaken project viability. Further, sectors including petroleum products, electricity and parts of real estate remain outside the GST chain, creating tax cascading and limiting the overall tax base. 

Businesses also continue to navigate multiple registrations, evolving place-of-supply rules, frequent legislative changes and extensive reconciliations. Delayed refunds and growing litigation remain additional areas of concern. He adds that while the establishment of the GST Appellate Tribunal fills a long-standing institutional gap, the focus must now shift to ensuring that delayed justice does not become prolonged dispute resolution. 

Maulik Manakiwala, Partner – Indirect Tax, Tax and Regulatory Advisory at BDO India, says GST remains one of India’s most significant macroeconomic achievements and has played a central role in formalising the economy. 

According to him, the first phase of GST, from July 2017 to September 2025, was largely about implementing the “One Nation, One Tax” framework, building taxpayer adoption, addressing operational issues and introducing systems such as e-way bills and e-invoicing. 

While the transition initially raised inflation concerns in sectors such as services, consumer durables, and logistics, Manakiwala says those concerns eased over time due to seamless ITC flow, reduced tax cascading and more efficient supply chains. 

He says GST has had broad macroeconomic effects by improving revenue mobilisation, strengthening economic efficiency, and contributing to long-term structural stability. 

As monthly GST collections have strengthened and the regime matured, policy focus has shifted toward GST 2.0—defined by tax rate rationalisation, lower litigation, simplified return filing, streamlined compliance and technology-led tax administration. 

Sector-specific concerns continue to persist 

In real estate, limited GST coverage remains a challenge as land transactions and completed buildings remain outside the tax framework, creating disputes over valuation, stamp duty, and supply classification. 

Within BFSI, compliance continues to operate alongside Reserve Bank of India regulations and financial reporting standards. While insurance has seen policy relaxations, taxation of financial services still requires greater legislative clarity. 

Manufacturing businesses continue to face operational friction under the e-way bill mechanism, where minor documentation errors can attract penalties even without tax evasion. 

On future reforms, Manakiwala says policy stability should become a key objective, with fewer legislative amendments, timely clarifications and deeper stakeholder consultation. 

Technology integration is expected to play a larger role in the next phase. Greater automation through pre-filled returns, real-time reconciliations and data-driven compliance tools could reduce manual burden on taxpayers. 

Refund delays, especially for exporters and zero-rated supplies, remain another area requiring attention despite improvements through customs–GSTN integration and automation initiatives. He also points out that the continued exclusion of petroleum products and alcoholic beverages from GST limits seamless credit flow and contributes to tax cascading across transport, logistics and manufacturing sectors. 

On the digital compliance front, Manakiwala says GST has evolved into one of the world’s most technology-driven tax ecosystems. Registrations, return filing, tax payments and refunds are now largely digitised, while e-way bills and analytics-based monitoring have strengthened compliance and fraud detection. 

Despite this progress, unresolved issues remain. Experts say the ITC framework requires further simplification, dispute resolution mechanisms need strengthening through a robust GST Appellate Tribunal, and parallel proceedings by central and state tax authorities must be reduced to prevent duplication and lower compliance burden.