Source: Greater Kashmir
The Goods and Services Tax (GST) was implemented on July 1, 2017, under the banner of “One Nation, One Tax, One Market”. In Jammu & Kashmir, it was implemented on July 8th 2017. It marked one of India’s most ambitious economic reforms since independence, subsuming 17 central and state taxes and 8 cesses into a unified value-added tax system.
Nine years later, in 2026, GST has evolved from initial teething troubles into a mature, digitally driven framework that has significantly boosted revenue, formalized the economy, and streamlined compliance & enhanced tax base. The journey reflects continuous adaptation through the GST Council, technological upgrades, and landmark “Next-Gen” or GST 2.0 reforms in September, 2025. A much-elaborated base of legal provisions and fully automated interface between taxpayer and tax authorities through common GST portal managed by GSTN (Goods & Services Tax Network) has been introduced.
There is no physical interface between taxpayer & tax administrator after the successful implementation of new tax regime GST in mid-2017. A new assesse specific administration has replaced the earlier tax-specific administration, as now, the Union & State Governments charge tax on a single tax base and the taxpayer has interface with a single authority- either Central or the State or the Union Territory , as the case may be.
The first five years of GST in India will always be remembered as a saga of perseverance, determination and will to conquer all hurdles to move forward. Overall the nine years of journey of GST is broadly divided into three phases,
- 1st. the implementation phase,
- 2nd. The consolidation phase &
- 3rd. the maturity & reforms phase.
Genesis and Early Challenges (2017–2020):
The constitutional foundation was laid by the 101st Amendment Act, 2016, which created the GST Council as a federal apex body for decision-making .The Central Board of Indirect Taxes (CBIC) is the apex body responsible for policy formulations & administrating indirect taxes, including GST. It was renamed from CBEC (Central Board of Excise & Customs) in 2018 following the GST rollout.
GST replaced a fragmented system plagued by cascading taxes, multiple checkpoints, and varying state laws. At launch, it featured a four-slab rate structure (5%, 12%, 18%, 28%) plus a cess on luxury and sin goods, with zero rating for essentials.
Initial years were challenging as the GST Network (GSTN) portal faced glitches, return filing (GSTR-1, 2, 3) proved complex, and businesses grappled with compliance. GSTR-3B emerged as a simplified summary return & GSTR-2A, the dynamic return. The e-way bill system, rolled out in phases from April 2018, eliminated inter-state barriers and reduced logistics delays. Rate rationalization began early, with corrections on hundreds of items.
Taxpayer registrations grew, but many small businesses faced adjustment difficulties. Despite hurdles, GST created a common national market. It removed cascading effect, improved supply chain efficiency, and boosted ease of doing business. A QRMP & Composition scheme was also introduced for small taxpayers & MSME’s. The biggest benefit of new tax regime is seamless free flow of ITC (Input Tax Credit) on inputs and removing all state barriers in interstate trade & commerce.
Digital Transformation:
The COVID-19 period tested the system but also accelerated digitization. Key initiatives included:- e-Invoicing mandated progressively from large taxpayers (₹500 crore turnover in 2020) down to ₹ 50 crore, then 10 crore & finally to Rs.5 crore in 2026 , reducing fake invoices and enabling auto-population data & real-time information .
QRMP scheme Quarterly returns with monthly payments for smaller taxpayers (up to ₹5 crore turnover) introduced. Aadhaar authentication for new registrations, mandatory post registration field visits and restrictions on Input Tax Credit (ITC) to curb fraud. Linkage between GSTR-1 and GSTR-3B, 2A & 2B for better compliance & real-time flow of ITC. These measures enhanced transparency & efficiency on GST Portal. The system proved resilient, with refunds processed more efficiently for exporters.
However, issues like inverted duty structures persisted in sectors such as solar items, renewable energy goods, textiles and pharmaceuticals. Cooperative federalism shone through GST Council meetings, balancing Centre-State interests, including compensation during revenue shortfalls.
Intelligent Administration & Reforms GST 2.0:
By the mid-2021-22, GST entered a phase of data-driven governance, stricter measures to improve compliance from taxpayers. Highlights included, mandatory six-digit HSN codes for B2B invoices, Invoice Management System (IMS) rollout. AI and risk-based scrutiny, Pre-filled GSTR-3B returns, Automated Scrutiny of Returns on GST portal. The GST Appellate Tribunal (GSTAT) was operationalized in 2026 to address dispute backlogs, though challenges like portal glitches and pending cases remained.
Taxpayer base expanded dramatically from 66.5 lakh in 2017 to 1.67 crore by ending June 2026, signaling greater formalization & expanding tax base. Annual gross collections grew from ₹7.4 lakh crore (2017-18) to ₹22.27 lakh crore in FY 2025-26 represents over 8% year-on-year increase from previous fiscal year, with monthly averages around ₹1.85 lakh crore. High-frequency data from GST became a key economic indicator.
GST 2.0: Next-Gen Reforms (2025 Onwards) :
The 56th GST Council meeting in 2025 approved transformative “Next-Gen” reforms, effective largely from September 22, 2025—hailed as GST 2.0 and Key features & changes included are:- Rate Rationalization, Shift from four slabs to primarily two (5% merit rate for essentials, 18% standard), with a 40% demerit rate for luxury/sin goods (e.g., tobacco, high-end vehicles having 0ver 1200 cc engine for Petrol vehicles & 1500 cc engine for diesel vehicles, lottery).
Many household items (soap, toothpaste, kitchenware, bicycles) moved to lower or nil rates. Exemptions expanded for healthcare, insurance, and essentials like UHT milk and paneer. Compliance simplification like, faster registrations (automated for low-risk in 3 days), risk-based provisional refunds (90% for exports/zero-rated), simplified schemes for small businesses and e-commerce suppliers are now in place on portal.
Other measures such as, Inverted duty corrections in sectors like textiles, pharmaceuticals, operational ease for exporters, and tech upgrades like IMS. These changes aim to reduce classification disputes, lower prices for consumers, ease working capital for businesses, and boost sectors like manufacturing, agriculture, and renewables. Early feedback indicates positive business impact and improved compliance.
J&K implemented GST on July 8, 2017, integrating it into India’s “One Nation, One Tax” framework shortly after its national rollout. This marked a major shift from the previous VAT and multi-tax regime to a unified, destination-based system. Recent rate rationalization (e.g., handicrafts, packaging, and hospitality & tourism sector from 12% & 18% to 5%) has enhanced competitiveness for pashmina, almonds, walnuts, and hospitality sectors. It eased interstate trade and input tax credits. Overall, GST has strengthened revenue mobilization, economic integration, and digital compliance in J&K, though structural issues and sector-specific vulnerabilities persist. It has laid a foundation for long-term growth with ongoing reforms.
GST’s nine-year journey—from a bold but bumpy launch to a refined, growth-oriented system—demonstrates India’s reformative capacity. It has delivered on “One Nation, One Tax, One Market,” fostered formalization, and generated resources for development. GST 2.0 marks a citizen-centric evolution, promising greater simplicity and inclusivity. The reform’s success lies not just in revenue but in transforming how India does business. Business sentiment improved markedly. Surveys showed a positive or neutral experiences, with digital compliance cited as a top benefit. Logistics costs dropped, supply chains integrated.
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