India has experienced unprecedented transformation in its tax landscape with the introduction of the Goods and Services Tax (GST). GST has shown immense confidence, reshaping the economy and driving digitisation while also confronting challenges and fraud which has also been echoed by 85% of the respondents to Deloitte’s GST@8 survey. As businesses and taxpayers adapted to the new regime, various disputes continued to emerge over interpretation, application, and compliance. While policy makers continued to issue circulars and instructions to address some of the emerging issues, clarity in rules and better dispute resolution are still essential. The survey results also reflect that 50% to 70% audits culminating in demand notices or orders increased from 30% in 2024 to 44% in 2025. For taxpayers, this underscores the critical need to maintain meticulous records and ensure strict GST compliance, even as fair audit practices and timely dispute resolution become increasingly important.
One of the biggest drawbacks as also observed in the present GST dispute resolution framework has been the non-functional GST Appellate Tribunal (GSTAT) forcing taxpayers to approach High Courts directly, leading to case backlogs, increased litigation costs, and prolonged uncertainty. With a congested judiciary, High Courts are overwhelmed with multiple cases which are not questions of law but on factual grounds better suited for the GSTAT. Furthermore, frequent retrospective amendments have also created business uncertainty and complicated compliance environment for the taxpayers. Key insights from Deloitte’s GST@8 survey Some of the favourable measures which have been observed by respondents as reflected in the survey results, include:
Government efforts in streamlining the investigations by issuance of multiple instructions.
Reduction in the rate of pre-deposit for filing appeals under GST.
Enabling the filing of paperless replies to notices and appeals on the GST portal.
While Global Capability Centres (GCCs) have favourably identified these measures as a crucial step to ease financial burden, Micro, Small and Medium Enterprises (MSMEs) have recognised the clarification on GST recovery processes as a key enabler for promoting procedural fairness. The survey also highlights that the proportion of audits resulting in demand orders under 50% declined from 57% in 2024 to 38% in 2025, suggesting improved audit precision by authorities or a stricter audit approach. However, taxpayers continue to get aggrieved by confirmation of hasty tax demands by adjudicating officers due to expiry of limitation periods, lengthy and often intrusive audits, and a perceived pro-Revenue approach by authorities. This fosters a perception of imbalance, with taxpayers burdened by aggressive enforcement and delayed justice. The survey reveals that the key issues faced by taxpayers during appellate proceedings include delay in disposal of appeals, lack of independent and detailed reasoning in orders which continue to fuel taxpayer dissatisfaction. Additionally, 47% of the respondents observed the frequent disregard of applicable circulars and clarifications during appeals which further impedes fair dispute resolution.
GST 2.0 – Reforms on dispute resolution framework The insights of the survey called for industry demand to strengthen the dispute resolution mechanism. Timely audit closures and streamlined documentation requirements have emerged as the top priorities (risen from Rank 3 in 2024 to Rank 1 in 2025) by all industries and businesses. The industry expects that persistent issues such as denial of export status, restrictions on input tax credit under Section 17(5), taxation of post-supply discounts and validity of credit notes, interest applicability under Section 50 should be addressed. It is imperative for the government to expedite the formation of GSTAT and ensure that it functions efficiently to address the surge in pending litigation. The industry also expects that the government should consider introducing periodic amnesty schemes to encourage taxpayers to voluntarily resolve disputes and avoid further piling up of litigation matters. The survey also revealed that delays in processing or disposal of advance ruling applications emerged as a widespread challenge, reported across industries and business sizes. Concerns have been highlighted especially by MSMEs around conflicting rulings with other state AAR (Authority for Advance Ruling) decisions on similar issues being passed without any justification. One of the key observations in the current advance ruling framework made by the respondents in the survey is pro-revenue rulings, despite clear facts and legal precedents. Addressing these inconsistencies and improving the transparency and rationale behind passing the advance ruling decisions is essential to boost the confidence in the taxpayers. The industry also expects that the government should not only work towards automating the interest calculations and payments on refunds and pre-deposits but also implement framework for uniform interest rate on both government demands and refunds and for the industry as a whole. This request has been strongly supported in the survey, with 64% of the respondents who are MSMEs and 58% by others, thereby highlighting a rising demand for equitable and consistent interest practices. Several priority areas requiring urgent attention are effective dispute resolution mechanism, ensuring uniformity in audits across central and state authorities, enhancing technological infrastructure for data availability, rationalising GST rates across sectors, resolving legal ambiguities especially concerning exports, and facilitating better access to working capital for businesses affected by prolonged disputes. As GST completes eight years and we move towards GST 2.0, the next wave of reforms should focus on further strengthening the features including uniformity and legal certainty that have contributed to the success of the GST dispute resolution framework and aim to make it more efficient. —The authors; Farheen Butt and Nitesh Kancharla, are Partners at Deloitte India. The views are personal.
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