The Universal Scholar Journal

Abstract

The Goods and Services Tax (GST) was introduced in India on 1 July 2017, under the 101st Constitutional Amendment Act. After nearly a decade of existence, GST has become one of the most important reforms in the commercial and fiscal history of the country. This paper presents a theoretical and conceptual assessment of the trajectory of GST, placing its performance in the context of the theory of optimal taxation, the design of destination-based consumption taxes and cooperative fiscal federalism. The study synthesizes evidence from secondary literature published after 2017 on GST's contribution to market unification, tax buoyancy, formalisation of enterprise and digital tax administration, while critically examining the continued challenges of compliance burden on micro, small and medium enterprises (MSMEs), input tax credit (ITC) frictions, rate multiplicity, classification litigation and centre-state fiscal tensions over the compensation cess. The paper also considers the 2025 ‘GST 2.0’ rate-rationalisation reform as a structural response to a decade of accumulated design frictions. The analysis concludes that GST has been a qualified success for Indian commerce, furthering the constitutional vision of “one nation, one tax, one market” while revealing the limits of a multi-rate, federally negotiated indirect tax architecture. It discusses implications for tax administration, policy design and future research of India’s indirect tax regime.

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F A Decade of GST: A Theoretical Evaluation of Its Successes and Challenges in Commerce