Advanced International Journal of Multidisciplinary Research

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The GST 2.0 Paradigm: A Structural Analysis of Fiscal Formalization and Economic Integration in India (2017-2026)

Author(s) Dr. DIPESH BHAGVANJI NATHWANI
Country India
Abstract The implementation of the Goods and Services Tax (GST) on July 1, 2017, marked the most ambitious structural tax reform in India’s post-independence history. This research paper evaluates the longitudinal impact of GST on the Indian economy, with a specific focus on the transition toward the “GST 2.0” framework implemented in late 2025. By replacing a fragmented, cascading multi-layered tax system with unified, destination-based consumption tax, GST aimed to integrate the Indian market, broaden the tax base and enhance logistical efficiency.
Through a comprehensive analysis of macroeconomic indicators, this study finds that GST has successfully catalysed the formalization of the economy, evidenced by the steady rise in monthly revenue collections – surpassing Rs.2 lakh crore milestone in 2025 – and a significant increase in the taxpayer base. The paper explores the sectoral shifts in manufacturing, agriculture and services, highlighting how the 2025 rate rationalization (moving toward a streamline tow-slab structure) has mitigated inflationary pressures and resolved ‘inverted duty’ structures.
Furthermore, the study examines the role of the Goods and Services Tax Network (GSTN) and AI-driven compliance in reducing tax evasion. Despite initial challenges related to MSME compliance and the cessation of the compensation cess for states, the paper concludes that GST has strengthened cooperative federalism and lowered the cost of internal trade. The finding suggest that while the inclusion of petroleum and electricity remains the final frontier, the current GST regime has fundamentally improved India’s ‘Ease of Doing Business’ and contributed approximately 1.5% to 2% to incremental GDP growth.
Keywords GST 2.0 Reforms, Fiscal Federalism, Input Tax Credit (ITC), Formalization of Economy, Rate Rationalization, One Nation, One Tax, Cascading Effect Logistics Efficiency.
Discipline Sociology > Commerce / Economics
Published In Volume 4, Issue 2, March-April 2026
Published On 2026-04-23
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