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By: Manoj Mishra
02 Jul 2026 6 min read
The transformation is visible in numbers. GST collections have grown from INR 7 lakh crore in FY 2017-18 to over INR 22 lakh crore in FY 2025–26, with April 2026 recording the highest gross collection of INR 2.43 lakh crore. Yet, the larger significance of these numbers lies beyond revenue collection. Collection trends, return filings, e-way bills and e-invoices increasingly serve as high-frequency indicators of consumption, investment, imports and business activity.
In these nine years, GST has built the foundation for a common market, created a digital compliance, widened the formal tax base and strengthened India’s revenue system. Its next phase must build on this foundation by solving the asymmetry in credit, sectors, disputes and data governance.
For most, GST’s ninth year will be remembered for one thing: things got cheaper. GST 2.0 moved to two principal rates of 5 per cent and 18 per cent, with a 40 per cent demerit rate for luxury and sin goods. Relief for essentials, household goods, medicines, small cars, two-wheelers, cement, farm machinery and consumer durables made consumption affordable with the intent to reduce classification disputes, support manufacturing and ease pressure on working capital.
However, for small and medium businesses, the GST story has been considerably less generous than the headline relief suggests. Compliance costs, frequent procedural changes and working capital locked in unutilised credit have remained persistent complaints from MSMEs for the better part of nine years. Ironically, GST 2.0 has not fully resolved this. Inverted duty structures continue to affect pharmaceuticals, textiles, footwear, food processing and electric vehicles, where the real constraint is not the tax rate charged on what a business sells but the credit trapped within its own supply chain. The next phase of reform needs to move from rationalising rates to rationalising credit, particularly for the businesses least equipped to absorb the cash flow hit.
One of the most welcome signals of the year was the legislative correction on intermediary services. The omission of Section 13(8)(b) of the IGST Act restores alignment with the destination-based character of GST by treating the place of supply in accordance with the location of the recipient. This correction is significant because it shows that the government can respond to long-standing industry pain points. GST neutrality can help preserve pricing competitiveness, improve cash flows and reduce the tax friction that Indian service exporters faced despite earning foreign exchange. The impact will be felt across IT/ITES, BPO/KPO, education consulting, GCCs, etc.
Alongside policy reforms, the judicial landscape has continued to shape the contours of GST. The Supreme Court’s ruling in the online gaming controversy has brought certainty to one of the largest exposures in GST history. By upholding GST on stake-based online gaming, fantasy sports and casino transactions on the full value of deposits or stakes, the apex court settled the skill-versus-chance debate for GST purposes once money is staked. This validates one of the largest tax exposures in GST history, with industry-wide implications exceeding INR 2.5 lakh crore.
The significance, however, goes beyond online gaming, since legal certainty does not automatically mean commercial recoverability. It shows why GST’s next phase needs forums capable of translating landmark rulings into predictable administration. Equally significant was the Court's refusal to interfere with the Bombay High Court's ruling on assignment of long-term leasehold rights, reaffirming that GST cannot be imposed merely because a transaction has economic value; its legal character remains equally important.
Yet, these decisions also highlight a larger reality. GST's second decade will not be defined by the absence of disputes. Questions surrounding taxability and valuation of corporate guarantees, secondment arrangements, cross-charge mechanisms, related parties, blocked credits and emerging digital business models will continue to test the boundaries of the law. The challenge is, therefore, not eliminating litigation but resolving it quickly and consistently.
This is where the operationalisation of the GST Appellate Tribunal becomes critical. GSTAT is not merely another appellate forum. It is the missing institutional link in GST’s journey from implementation to certainty. For nearly eight years, recurring GST disputes moved disproportionately to writ courts, creating fragmented outcomes and jurisdictional inconsistency. GSTAT has the potential to convert scattered litigation into national jurisprudence. Its success will determine whether GST’s second decade becomes nationally consistent or nationally litigated.
Beyond disputes and rates lies the next frontier of GST, that is, intelligent tax governance. GST already has the data layer: e-invoices, e-way bills, returns, refunds, imports, payments, vendor trails and reconciliation data. The system is now moving towards risk-based scrutiny, automated validations, AI-led anomaly detection, vendor profiling and refund screening.
This can be transformative. AI can help detect fake invoicing, identify circular trading, prioritise high-risk refunds, reduce manual intervention and make enforcement more targeted. However, a smarter tax system must also be a fairer tax system. Algorithmic scrutiny should not become a black box. Taxpayers must have access to relied-upon data, explainable risk flags, human review, meaningful correction windows and safeguards where mismatches arise from system limitations rather than non-compliance.
GST 3.0 should, therefore, be built on four pillars.
First, seamless credit, including a roadmap for sectors facing blocked credit and inverted structures.
Second, faster and more consistent dispute resolution through a fully functional, digital-first GSTAT.
Third, refined data governance, where analytics improves compliance without compromising due process.
Fourth, structural completion of GST, including a calibrated roadmap for petroleum products, clearer rules for digital assets and tokenised models, and improved convergence between GST, customs and direct tax data.
GST at nine has delivered economic stability. Its collections are stronger, its digital backbone is deeper and its policy architecture is more responsive than in the early years, though maturity will now be measured differently. The test of GST’s next phase will not be how much data the system can collect, but how intelligently and fairly it can use that data. It will not be how many disputes are generated, but how quickly certainty is delivered. It will not be whether rates are lower, but whether credit is seamless and business outcomes are predictable.
GST at nine delivered stability. GST at ten must deliver trust, certainty and intelligent governance.
Shilpa Verma, Associate Director, Grant Thornton Bharat and Ajay Jha, Assistant Manager, Grant Thornton Bharat have also contributed to this article.
This article first appeared in the FE CFO on 6 July 2026.
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Grant Thornton Bharat’s PolicyCast is your window into policy, tax, and regulatory developments. Each episode features expert perspectives on issues that matter to businesses, individuals, and the wider economy.
The June 2026 edition of the Grant Thornton Bharat Monthly US Tax Bulletin provides a concise summary of recent key developments in federal and state taxes in the US.
