EVOLUTION OF INDIA’S TAX STRUCTURE WITH SPECIAL REFERENCE TO SERVICE TAX AND GOODS AND SERVICES TAX (GST): AN EMPIRICAL ANALYSIS, 1994–95 TO 2025–26
https://doi.org/10.65725/JCMCE/2/3/013
JOURNAL OF CONTEMPORARY TRENDS IN MANAGEMENT, COMMERCE AND ECONOMICS (JCMCE)
ISSN: 3108-3501
Volume 2 Issue 3, July -September 2026
Abstract:
Tax revenues are a significant source of government funds and are needed to finance the activities of the Government in the field of development and welfare. Since the economic liberalization in 1991, India’s tax system has greatly changed. The major development during this period was the introduction of service tax in 1994-95. Initially, only three services were brought within the tax net at a rate of 5 per cent such as telephone services, general insurance services and stockbroking services, but the coverage expanded considerably over time. It was noted that service tax later turned into a key portion of the indirect-tax revenues of the Central Government. The Goods and Services Tax (GST) was introduced on 1 July 2017 as a significant change in the structure. GST brought together various indirect taxes such as service tax from both the Central and State governments, and led to a more consolidated structure of indirect taxes. This study reviews the trends in direct and indirect tax revenues, growth and contribution of service tax in 1994-95 to 2016-17 and subsequent performance of GST in 2017-18 to 2025-26. The secondary data has been taken from Reserve Bank of India, Ministry of Finance, Department of Revenue, Economic Survey and Union budget and receipt budget. Percentage, annual growth rate and compound annual growth rate (CAGR) are used for analysis.
During the GST period, gross GST receipts of the Union Government increased from ₹4,42,561 crore in 2017–18 to ₹10,27,041 crore in 2024–25 and ₹10,46,480 crore in the 2025–26 Revised Estimate. The CAGR during 2017–18 to 2025–26 RE was 11.36 per cent. According to the latest Economic Survey, in the first half of 2025 (April–December) e-way-bill volumes grew by 21 per cent year-on-year while numbers of GST registrations rose from around 60 lakh in 2017 to over 1.5 crore. The study finds that India’s tax system has become a relatively consolidated, indirect-tax based system, becoming more and more digital. Sustainable tax revenue mobilisation requires continued growth of the tax base, tax compliance facilitation, better enforcement and tax policy stability.
Authors: Suruliraj I, Dr. N. Suresh Babu
Keywords: Tax Structure, Direct Tax, Indirect Tax, Service Tax, GST, Tax Revenue, Revenue Mobilisation, Tax Reform, India.