Economic Survey 2025-26: GST rationalisation expected to support demand by lowering tax incidence

The Economic Survey for the current financial year, tabled by Finance Minister Nirmala Sitharaman in Parliament on Thursday, January 29, says that the recent Goods and Services Tax (GST) rationalisation is expected to support demand by lowering tax incidence and improving price competitiveness. The Survey also highlights the steps that the government should take to streamline the GST network.

"Since the lower rates are expected to stimulate higher consumption volumes and strengthen compliance, volume effects could offset the impact of rate reductions on revenues," said Economic Survey 2025-26 authored by Chief Economic Advisor V. Anantha Nageswaran.

Economic Survey added that the next wave of GST reforms could focus on reimagining the e-Way Bill system as a facilitator of smooth logistics rather than only as a tool for enforcement and control, in line with the changing needs of businesses and supply chains.

“As in the case of NUDGE, policy design could increasingly rely on trust-based and technology-driven compliance models, such as a “trusted dealer” framework, under which taxpayers with a strong compliance record face minimal physical checks and enjoy greater certainty in the movement of goods. At the same time, wider use of e-seals and electronic locking systems, integrated with e-Way Bills and vehicle tracking technologies, can ensure secure, end-to-end tracking of consignments without routine stoppages on the road,” Economic Survey noted.

As per the Economic Survey gross GST revenue during April-December 2025 stood at ₹17.4 lakh crore, recording a YoY growth of 6.7%. The GST revenue growth has broadly aligned with the prevailing nominal GDP growth conditions, thus influenced in part by lower inflation. As a result, while growth rates appear lower in percentage terms, collections in absolute terms have recorded multiple all-time highs during the current fiscal year.

The Survey highlighted on the steady growth in number of taxpayers getting registered on the GST network.

“Underlying strength of GST revenues is reflected in the steady expansion of the tax base, with registered taxpayers increasing from about 60 lakh in 2017 to over 1.5 crore at present, indicating deeper formalisation of economic activity. In parallel, high-frequency indicators suggest robust transaction volumes, with cumulative e-way bill volumes during April-December 2025 growing by 21% YoY,” Economic Survey said.