India’s Goods and Services Tax (GST) framework is entering a new phase of technology-led reform as authorities increasingly adopt artificial intelligence, advanced analytics, and digital verification systems to improve compliance and streamline tax administration.

As the indirect tax regime completes nearly a decade since its launch, policymakers are focusing on reducing manual intervention, enhancing transparency, and improving efficiency across the taxation ecosystem.

Government Shifts Focus to AI-Based Compliance Systems

Officials say the next phase of GST reforms will prioritise artificial intelligence-driven monitoring tools, faster refund processing, and automated data validation rather than a sole focus on tax rate adjustments.

The objective is to simplify compliance for businesses—especially micro, small and medium enterprises (MSMEs)—while strengthening the government’s ability to detect tax irregularities through integrated data systems.

Authorities are also working toward deeper coordination between GST, income tax, and customs databases. This integration is expected to enable real-time identification of inconsistencies and improve enforcement efficiency using data-driven insights.

GST’s Journey From Tax Reform to Digital Ecosystem

Introduced on July 1, 2017, GST replaced a complex structure of multiple indirect taxes with a unified national framework aimed at creating a “One Nation, One Tax” system.

Since its rollout, the number of registered taxpayers has grown significantly—from about 66.5 lakh in 2017 to nearly 1.6 crore in 2026—reflecting wider adoption and formalisation of the tax base.

Over time, the tax structure has also evolved, with periodic revisions to rate slabs and classification categories. Essential goods have largely been rationalised across standardised brackets, while higher rates continue to apply to luxury and demerit items.

GST Revenues Show Strong Long-Term Growth

Government data indicates steady growth in GST collections over the past decade. Average monthly revenue, which stood at around ₹89,700 crore during the initial implementation phase, has risen to approximately ₹1.85 lakh crore in 2025–26.

Total GST collections for the financial year 2025–26 reached an estimated ₹22.27 lakh crore, marking an increase of 8.3% compared to the previous year.

However, petroleum products remain outside the GST framework due to lack of consensus between the Centre and states on inclusion within the unified tax system.

Digital Integration to Strengthen Tax Enforcement

Looking ahead, authorities plan to expand the use of AI and analytics across tax administration systems to detect evasion patterns and improve compliance accuracy.

The proposed framework aims to integrate GST with income tax and customs data, enabling a more comprehensive and automated monitoring system for financial transactions and filings.

Officials believe this shift will reduce paperwork, improve refund timelines, and create a more transparent and efficient tax environment for businesses and individuals alike.

At the International MSME Day 2026 celebrations held at the Dr. Ambedkar International Centre, Vice President C. P. Radhakrishnan emphasized that Micro, Small, and Medium Enterprises (MSMEs) will play a defining role in achieving India’s long-term development vision of “Viksit Bharat @2047.”

Addressing the ‘MSME Day 2026–Udyami Bharat’ gathering, the Vice President described MSMEs as the backbone of India’s economy, representing the ambition of young entrepreneurs, the determination of first-generation business owners, and the resilience of small industries across the country. He noted that India’s journey toward becoming a developed nation will be strongly driven by this sector’s growth and innovation.

MSMEs urged to scale up with quality and ambition

Drawing from his experience in public service and industry leadership, Radhakrishnan encouraged entrepreneurs to stay committed to their businesses and overcome early-stage challenges with persistence. He stressed that maintaining high product and service quality is essential for survival in a competitive global marketplace.

While cost efficiency remains important, he cautioned that it should never compromise standards. He also called on enterprises to continuously expand their scale of operations, urging micro businesses to grow into small enterprises and small firms to evolve into medium-sized companies.

He highlighted the importance of supportive policies, easier access to credit, and increased investment to enable sustained growth within the MSME ecosystem.

AI and digital tools positioned as growth drivers

A major focus of the Vice President’s address was the growing importance of Artificial Intelligence (AI) and digital transformation. Aligning with the global theme “Human-Centered Entrepreneurship in an AI-Driven Future,” he encouraged MSMEs to embrace emerging technologies as opportunities rather than threats.

He compared current AI-driven changes to earlier technological shifts such as the introduction of computers, which initially raised concerns but eventually created new jobs and industries. According to him, AI can significantly enhance productivity, innovation, and global competitiveness for small businesses.

Government launches new digital platforms for MSMEs

The event also saw the unveiling of several digital initiatives aimed at strengthening India’s MSME ecosystem:

• PMEGP 2.0 Portal: Designed to streamline beneficiary processes and integrate with Jan Samarth Portal for faster credit access.
• SAMADHAAN 2.0 Portal: A system to track delayed payments owed to MSMEs by government departments and agencies.
• MSME Global Mart 2.0: Integrated with the Open Network for Digital Commerce (ONDC), it aims to expand market access for small businesses across India and abroad.
• Multilingual AI Support System: An AI-based platform offering services in 22 Indian languages, including voice-based grievance redressal and document translation to improve accessibility.

Push toward a digitally empowered MSME sector

The government’s continued rollout of digital platforms reflects a broader strategy focused on formalization, innovation, and technology adoption within the MSME sector. Officials said these initiatives are designed to improve ease of doing business, enhance transparency, and help small enterprises compete in both domestic and global markets.

With AI integration and digital infrastructure gaining momentum, policymakers believe MSMEs are well-positioned to become a central force in India’s economic transformation.

Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.