India’s biggest indirect tax reform, the Goods and Services Tax (GST), is undergoing a transformation with the rollout of GST 2.0. What was once criticized as complicated and even mocked as “Gabbar Singh Tax” has now evolved into a simpler, more efficient system for businesses as well as common citizens.

Why GST Was Called “Gabbar Singh Tax”

When GST was launched in July 2017, opposition parties, especially Congress leader Rahul Gandhi, sharply criticized its design. Gandhi famously dubbed it “Gabbar Singh Tax”, comparing it to the notorious villain from the movie Sholay, who extorted money from villagers.

The opposition argued that the complex tax slabs and compliance structure were burdening small traders and the middle class. According to them, GST was not simplifying taxes but making it harder for ordinary people and small businesses to manage their finances.

The Vision Behind GST

Despite political criticism, GST has been widely recognized as one of the most significant economic reforms in independent India. The idea was to replace the confusing network of multiple state and central taxes with a single, uniform tax system across the country.

For businesses, it brought a common compliance mechanism and reduced tax cascading. For consumers, it promised lower costs over time as efficiency improved.

At the time of its introduction in 2017, the average GST rate was 14.4%, which gradually came down to 11.6% by September 2019. According to a State Bank of India research report, under GST 2.0, the average tax rate may further decline to around 9.5%.

The Challenge of Multiple Slabs

One of the biggest hurdles in the early days of GST was its multiple tax slabs — 5%, 12%, 18%, and 28%. Different goods and services were placed under different categories, leaving businesses and consumers confused.

The government argued that multiple slabs were necessary in the beginning. On one hand, they ensured affordability for essential goods, while on the other, they helped states and the Centre maintain tax revenues. To ease state concerns about potential revenue loss, the Centre guaranteed five years of compensation.

Technical and Administrative Difficulties

Apart from slabs, technical issues made GST implementation tougher in its early years. Small traders and businesses struggled with digital filing, challan matching, and return submissions.

By 2020, the situation worsened due to the COVID-19 pandemic. Tax revenues dropped sharply while healthcare and welfare expenses shot up. In such a situation, reducing GST rates further would have widened the fiscal deficit. However, over the years, the government gradually rationalized the system, moving many items out of the 28% bracket.

Why GST 2.0 Now?

Post-pandemic, India’s GST collections have been growing steadily. Robust digital systems, tighter enforcement, and reduced tax evasion have strengthened the revenue base. With this stability, the government is now in a better position to implement structural reforms.

GST 2.0 focuses on:

• Simplifying compliance for small and medium businesses.

• Making returns and refunds faster and smoother.

• Reducing the number of tax slabs for greater transparency.

• Ensuring fair tax distribution without burdening the middle class.

From “Gabbar Singh” to “Good and Simple Tax”

A tax system once labeled as exploitative has now become more user-friendly. With GST 2.0, both businesses and consumers are expected to experience greater ease of compliance, reduced complexity, and long-term benefits.

The evolution of GST reflects India’s capacity to learn from initial challenges and implement course corrections. What began as the “Gabbar Singh Tax” may finally live up to its original name — the “Good and Simple Tax”.