General Studies Paper 3 (Indian Economy)
Question:- 14. Comment on the achievements of GST with regards to the past 5 years of its functioning. Answer in 150 words (10 marks)
Jul 12, 2022


Half a decade ago, India welcomed its biggest change in its indirect tax system with the Goods and Services Tax (GST), which revamped the country’s entire indirect tax structure and significantly modified tax administration and compliance. GST is actually  a mix of success and work in progress. Here’s how:

  1. Ease of compliance:
  • Brought efficiencies in indirect tax compliances
  • Reduced the number of indirect tax authorities that businessmen needed to interact with. E-voicing has also ensured that a trade invoice is identified by a unique identification number which is generated by automated government-backed online portals.
  1. Widening of India’s tax base:
  • More than doubled from 66.25 lakhs to 1.28 crores in the last four years (2017-21)
  1. Increased logistics efficiency:
  • All the inter-state barriers have been eliminated by removing check-posts, introducing a nationwide e-way bill, eliminating entry tax, hence reducing the transit time of movement of goods within the country.
  1. Reinforced cooperative federalism:
  • GST Council has emerged as a successful example of cooperative federalism and its functioning has been free from political biases.
  • Centre and States overcame the hurdles in the way of GST, in complete consensus, in the largest interest of the country and its people.
  1. Increase in Transparency:
  • The taxpayers can easily get the basic information about any business by entering the respective EPAN or GSTIN which has increased transparency in the system.
  1. GST and People:
  • GST is a pro-people reform. Average tax rates in GST have come down.
  • A Finance Ministry study suggested that consumers saved at least 4% of their household monthly expenses on an aggregate after GST.
  1. MSMEs:
  • Earlier VAT exemption and composition scheme thresholds were very small. GST introduced a composition scheme which allowed small businesses to pay a fixed rate on their turnover without any paperwork.
  • GST has opened up new avenues through quick bill discounting and loans to MSMEs.
  • Compliance burden of MSMEs has reduced significantly with option of quarterly return filing for taxpayer having annual turnover of 5 crore.


However, there are many issues which still need to addressed. Some of them being refund delay issues, constant amendments, adaptations and technical issues, complex penalties, multiplicity of tax rates, inconsistency in filing returns and dependence of States on the compensation from Centre to successfully realize the goal of ‘One Nation, One Market, One Tax’ – the motto behind the introduction of GST.