Introduction
The Goods and Services Tax (GST), implemented in India on July 1, 2017, represents a landmark reform in the country’s indirect taxation system. By replacing a patchwork of central and state taxes with a unified framework, GST aimed to simplify compliance, eliminate cascading taxes, and boost economic efficiency. Over the years, it has generated substantial revenue, with collections growing amid challenges like the COVID-19 pandemic. This article examines GST’s financial performance from inception to fiscal year 2024–25 (ending March 2025), including annual revenues, center-state distribution, burden sharing, corporate pass-through mechanisms, and impacts on vulnerable populations. Data is drawn from official sources and economic analyses as of September 22, 2025.
Annual GST Revenue Collections
GST revenues have demonstrated resilience and growth, driven by factors such as digital compliance tools (e.g., e-invoicing), an expanding taxpayer base exceeding 1.4 crore registrants, and economic recovery. Collections are reported on a fiscal year basis (April–March), with the inaugural year (2017–18) covering only July 2017 to March 2018. Cumulative gross collections from 2017 to 2025 surpass ₹117 lakh crore, reflecting an average annual growth of 10–12% post-2021.
The following table summarises gross GST collections year-wise:
| Fiscal Year | Gross GST Collections (₹ lakh crore) | Key Notes |
|---|---|---|
| 2017-18 | 7.40 | Initial implementation phase; collections started mid-year. |
| 2018-19 | 11.77 | Strong growth due to stabilization and wider taxpayer base. |
| 2019-20 | 12.22 | Moderate increase; impacted by economic slowdown in latter half. |
| 2020-21 | 11.36 | Decline due to COVID-19 lockdowns and reduced economic activity. |
| 2021-22 | 14.76 | Recovery post-COVID; boosted by reopenings and digital compliance. |
| 2022-23 | 18.10 | Significant rise with economic rebound and higher inflation. |
| 2023-24 | 20.18 | Continued growth; record monthly highs amid formalization. |
| 2024-25 | 22.08 | Record annual high; 9.4% YoY growth, reflecting robust consumption and compliance up to mid-2025. |
Revenue Sharing Between Center And States
Under the GST regime, revenues are apportioned as follows: Central GST (CGST) accrues entirely to the central government, State GST (SGST) to individual states, and Integrated GST (IGST) is split 50:50. A Compensation Cess on “sin goods” (e.g., tobacco, aerated beverages) compensated states for initial revenue shortfalls until 2022, with extensions for debt repayment through 2026.
From 2017 to 2025, the center retained approximately 30–35% of total revenues (₹35–40 lakh crore, including its IGST and cess shares), while states received 65–70% (₹77–82 lakh crore, encompassing SGST, IGST shares, compensation, and 41% devolution from the center’s divisible pool). Compensation Cess amassed around ₹10 lakh crore, primarily disbursed during 2017–2022, including ₹2.7 lakh crore in borrowings amid COVID-19 shortfalls.
As of July 2025, most dues are settled, with a ₹95,000 crore cess surplus for repayments. Pending amounts are negligible (₹5,000–10,000 crore combined for two unspecified states, tied to audits or disputes). Opposition claims of ₹1.5–2 lakh crore in projected losses from 2025 rate changes are not legally pending dues. State-wise breakdowns of pendings are not publicly detailed.
Distribution Of GST Burden
As an indirect tax, GST is regressive, with lower-income households bearing a disproportionate share relative to income due to higher consumption of taxed goods. Analysis from the 2022–23 Household Consumption Expenditure Survey indicates the burden has remained stable from 2017 to 2025, mitigated by exemptions on essentials like food, education, and health. Approximately 65% of revenues stem from the 18% slab, while the 5% slab on essentials contributes 7%.
The table below outlines the burden by income group (rural and urban combined):
| Income Group | Proportion of GST Burden (%) | Key Insights (2017-2025) |
|---|---|---|
| Bottom 50% (Poorest; <₹1.5 lakh/year) | 31-32% | High share despite exemptions on essentials; regressive impact as they consume more taxed items relative to income. |
| Middle 30% (₹1.5-5 lakh/year) | 31-32% | Similar burden to bottom 50%, highlighting lack of progressivity; affected by taxes on durables and services. |
| Top 20% (Richest; >₹5 lakh/year) | 36-38% | Lower relative burden as % of income, but absolute higher due to luxury consumption; benefits from input tax credits in business. |
Corporate Pass-Through Of GST To Consumers
Corporates collect GST but reclaim it via Input Tax Credits (ITC), transferring the net burden downstream through pricing. This mechanism ensures businesses are mere intermediaries, with nearly 100% of the tax ultimately borne by end consumers, though some absorption occurs in competitive sectors. Listed companies (0.62% of taxpayers) contribute ~35% of revenues but pass it on fully, with compliance rising from 59% in 2022 to 85% in 2025. Consumer price indices attribute 1–3% annual inflation to GST since 2017.
Year-wise data on corporate contributions and pass-through:
| Year | GST from Corporates (as % of Total) | Estimated % Passed to Consumers | Key Stats/Impact |
|---|---|---|---|
| 2017-18 | ~30% | 95-100% | Initial disruptions; ITC claims low (60%), but prices rose 2-5% on averages. |
| 2018-19 | ~32% | 98% | Compliance improved; consumer inflation up 0.5-1% due to pass-through. |
| 2019-20 | ~33% | 99% | ITC efficiency >80%; sectors like FMCG passed 100% via pricing. |
| 2020-21 | ~30% (dip) | 95% | COVID reliefs reduced pass-through; but essentials prices stable. |
| 2021-22 | ~34% | 99% | Recovery; durables prices up 3-4% with full transfer. |
| 2022-23 | ~35% | 100% | High compliance; ~27.5% of net tax from GST, all consumer-borne. |
| 2023-24 | ~35% | 100% | Record collections; pass-through evident in 9-10% effective rate. |
| 2024-25 | ~35% | 99-100% | Reforms (e.g., to 5/18% slabs) may reduce pass-through on essentials by 2-3%. |
Impacts Of GST Reductions On Vulnerable Populations
The 2025 GST reforms, effective from September 22, have streamlined tax slabs primarily to 5% and 18%, phasing out the 12% and 28% brackets, while applying reductions to more than 200 essential items such as soaps, toothpaste, detergents, and other daily necessities, with the goal of easing consumer burdens amid broader economic strains in India amid trade tensions and social disparities.
Although the government portrays these adjustments as a major relief initiative, potentially forgoing up to Rs. 2 trillion in revenues to stimulate the economy, critical analyses reveal this as an overstated narrative, where the reductions merely lessen tax extraction without injecting fresh capital into households, particularly against a backdrop of manipulated GDP figures and data deceptions that inflate growth perceptions while masking ground-level hardships, as detailed in examinations of India’s GDP mirage, including discrepancies, debt traps, and tariff turmoil in expenditure versus production methods from 2014 to 2025 and further in revelations about unraveling GDP illusions, global data deceptions, and exposed lies.
For the nearly 81 crore beneficiaries under the National Food Security Act (NFSA)—representing about 56% of India’s population—who depend on subsidised 5 kg monthly rations, and the approximately 100 crore individuals surviving on precarious daily incomes, these cuts offer negligible relief in lowering daily expenses or boosting spending power, given the near-zero price elasticity of demand among impoverished and debt-laden groups.
Rather than delivering the projected 5–10% cost savings that could theoretically reduce poverty by 1–2% and enhance consumption by 2–3%, the actual impact is minimal, with small savings—like reducing a Rs. 10 tax to Rs. 8—quickly diverted toward servicing mounting debts instead of enabling extra purchases, thus sustaining a bare-survival consumption pattern devoid of discretionary spending.
This ineffectiveness is compounded by a 6% year-on-year slump in domestic consumption, which now contributes only 55% to GDP in 2025-26, with Private Final Consumption Expenditure (PFCE) growth at a modest 6.0% in Q4 FY25 but heavily reliant on debt—where 55-60% of expenditures are loan-financed rather than income-generated, down from 75% income-based in 2014-15 to just 40% in 2025-26, as highlighted in discussions on the mirage of GST relief and exposing India’s consumption collapse.
The original 2017 GST rollout intensified household financial pressures through inflationary price surges and its regressive structure, disproportionately affecting the bottom 50% of the population—who earn only 40% of national income yet bear 64.3% of GST revenues—while subsequent exemptions and rate adjustments have failed to make the system genuinely pro-poor, instead channeling 5-6 trillion rupees in tax incentives to large corporations and perpetuating widespread poverty and hunger, as evidenced by India’s Global Hunger Index (GHI) score of 27.3 in 2024 (indicating “serious” hunger levels) and a Gini coefficient of 0.42, with the top 1% controlling 43% of wealth and broader inequalities reflected in a Gini index hovering around 33-35.
For India’s debt-overburdened citizens, where household debt has climbed to 48.6% of GDP (equating to Rs. 149.9 lakh crore) and per capita debt has risen 23% to around Rs. 4.8 lakh by March 2025—largely driven by non-housing retail loans making up 55% of the total—these GST reductions do little to alleviate borrowing necessities for basics or liberate income for debt repayment, contradicting assertions of 3–5% cuts in borrowing needs.
This is further undermined by stagnant wages, a post-COVID debt explosion that has shifted consumption toward debt dependency (up to 60%), and an economic downturn featuring 22% youth unemployment (urban youth at ~23%), official rates at 8.5% (blended PLFS/CMIE data showing 6.5% overall in 2025), and disguised unemployment at 15–18% across sectors like agriculture (25–35%), manufacturing (5–10%), and services (10–15%).
Household savings have hit a 50-year low of 5.3% net (gross at 27.5% of GDP), compelling vulnerable groups—especially informal workers who depleted savings during the pandemic—to focus on debt obligations over new expenditures.
External factors, such as the August 2025 U.S. tariffs leading to 14-20% export declines (a $20-30 billion loss and 1-2 million direct job losses, plus 3–5 million indirect), a rupee depreciation to Rs. 88 per USD (-5% YoY), and non-tariff barriers (NTBs) like 20% H-1B visa cuts threatening 15–20% of services exports, are projected to drag real GDP growth to 4% for FY25-26 (down from a baseline 6-6.5% to 5-5.5% post-tariffs), with risks of a 38.46% contraction by 2026 if unchecked.
These pressures, alongside GDP discrepancies between expenditure and production approaches (0.5-2% gaps, up to 2.5 pp in 2020-21 due to informal sector undercounting), and manipulations like overstated PFCE by 2-3% in key years, underscore how GST reforms, despite nominal cost reductions on essentials, fail to ignite meaningful relief or consumption recovery amid entrenched structural deprivations, rural distress affecting 200 million in poverty, inflation at 5-7%, and ignored informal activity (~45% of the economy), as further detailed in exposures of unraveling GDP illusions, global data deceptions, and lies.
Since its 2017 launch, GST has strengthened fiscal frameworks by yielding annual revenues of Rs. 20 lakh crore, accounting for 27.5% of net taxes via improved efficiency and formalisation, yet this has deepened economic divides and fallen short of widespread benefits, rather than simply adding a claimed 1–2% to GDP.
Although GST did not directly balloon national debt—with compensation loans balanced by cess surpluses—its regressive nature has indirectly propelled household debt from 36% to 48.6% of GDP between 2020 and 2025, as 70-80% of collections stem from those capturing just 40% of income, ensnaring the bottom 50% (shouldering 64% of the load) in survival borrowing cycles amid initial price shocks that spiked inflation by 0.5–3% and fueled poverty surges during the 2020–21 COVID lockdowns.
Critics argue this regressivity exceeds the reported 31% burden on the bottom 50%, emphasising how GST’s architecture privileges the affluent with hefty tax breaks while aggravating poverty for 800 million dependent on government food aid and 1 billion hand-to-mouth workers, whose inelastic, debt-reliant consumption is further distorted by data manipulations that understate disruptions like the 2017-18 GST rollout and ignore informal sector collapses.
While exemptions and schemes like NFSA have tempered some hunger—evident in India’s GHI improvement from 28.2 in 2014 to 27.3 in 2024, though still at a “serious” level ranking 105th—they have not counteracted GST’s broader poverty-exacerbating effects, particularly with public debt at 85% of GDP (Rs. 181.74-182 lakh crore), consuming 25-30% of budgets in interest payments (Rs. 11.5 lakh crore) and limiting funds for enhanced social protections amid sluggish 5–7% annual growth that favors elites.
In this landscape, GST is viewed not as a poverty mitigator but as a perpetuating “trap,” where taxes on daily transactions keep the masses financially strained, amplified by declining investments (net FDI below 1% of GDP, plummeting 99% to $353 million in FY24-25), FII outflows, widening trade deficits ($50.6 billion globally, with US exports dropping 43% in merchandise), and rupee depreciation inflating import costs by Rs. 880–1,320 billion.
These dynamics erode economic resilience and amplify the chasm between nominal GDP estimates (Rs. 315-357 lakh crore or $3.58-4.06 trillion) and tangible hardships, including manipulated GDP growth (official 8.2% in 2023-24 vs. corrected 5.0%, with overstatements of 0.4-1.9% via tweaks like base year changes and assumed digital spending), ignored drags such as demonetisation and GST-induced cash crunches, and potential stock market bubbles like the “DII Bubble” with a 90% burst risk in 2025-26, harming 90% of retail investors amid stagnant wages and rural vulnerabilities.
Overall, GST’s contributions to fiscal stability are overshadowed by its role in entrenching inequalities, with critiques of data fudging and corruption in infrastructure spending from 2014-2025 highlighting how such deceptions sustain illusions of progress while vulnerable populations grapple with persistent debt, poverty, and hunger.
Possible Solution: Overall Economic Development Is The Key
To effectively address the needs of vulnerable populations while ensuring fiscal sustainability, several policy alternatives can be considered, aiming to create a more equitable economic environment, reduce poverty, and enhance the overall well-being of disadvantaged groups.
One key approach is implementing targeted subsidies and direct cash transfers, where subsidies for essential goods like food, healthcare, and education provide immediate relief to low-income households, and expanding programs like the Direct Benefit Transfer (DBT) empowers individuals to use funds for their specific needs, such as debt repayment.
Another option is adopting a more progressive taxation system, including higher tax rates for wealthy individuals and corporations to generate revenue for social programs, along with wealth taxes on property or inheritances to redistribute resources and tackle income inequality.
Enhancing social safety nets is also crucial, through expanded employment programs that create jobs in low-income sectors to reduce unemployment and underemployment, and exploring Universal Basic Income (UBI) as a long-term solution to guarantee a basic standard of living for all citizens regardless of employment status.
Investing in education and skill development can further empower individuals by expanding vocational training programs to build in-demand job skills and providing subsidised education for marginalised communities to break poverty cycles through access to higher-paying opportunities.
Supporting small and medium enterprises (SMEs) can stimulate local economic growth and job creation by offering low-interest loans or grants for expansion and tax incentives to encourage entrepreneurship and innovation.
Given the reliance of many vulnerable populations on agriculture, strengthening support in this sector is vital, including ensuring fair Minimum Support Prices (MSP) for crops to protect farmers from fluctuations and providing access to modern technology, seeds, and irrigation to improve productivity and income.
Finally, establishing robust monitoring and evaluation of policies through data-driven decision-making to assess impacts on different demographics and creating feedback mechanisms from affected communities ensures that strategies are effective, responsive, and adjustable based on real-world experiences.
Implementing these policy alternatives can create a more inclusive economic environment that addresses the needs of vulnerable populations while ensuring fiscal sustainability, focusing on targeted support, progressive taxation, and investment in human capital to foster a more equitable society that empowers individuals, reduces poverty, alleviates immediate financial burdens, and drives long-term structural changes for enhanced resilience and economic stability.