The GST Council, comprising finance ministers from the Centre and states, should simplify compliance, reduce tax slabs to three, and broaden the base by bringing petroleum products under GST, a PwC India report said on Monday.
Goods and Services Tax (GST), launched on July 1, 2017, completes eight years on Monday. GST subsumed about 17 local taxes and 13 cesses into a five-tier structure, simplifying the tax regime.
Over the last 8 years, the average monthly GST collection rose from Rs 90,000 crore in 2017-18 to Rs 1.84 lakh crore in 2024-25 (April-March). The collections touched a record high of Rs 2.37 lakh crore in April 2025.
"GST in India now stands at a critical juncture where aligning with global trade dynamics is essential. The evolving landscape of international trade, coupled with the growing need to attract investments in the manufacturing and global capability centre (GCC) sectors, calls for a GST framework that is agile, investor-friendly, and globally competitive," the PwC report said.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab
"A transition from 4-tier to a 3-tier rate structure would reduce interpretational disputes, improve tax certainty and simplify compliance," PwC said.
A comprehensive review of GST rate slabs is required to minimise the disparity between the GST rate on inputs as against that on output, especially for sectors such as electronic vehicle, aviation and e-commerce, which face credit accumulations on account of the inverted tax structure, it added.
PwC also made a case for levying GST on petroleum products, starting with Aviation Turbine Fuel (ATF), to remove the cascading effect and cash flow problem of the industry.
Petrol, diesel, natural gas and other petroleum products continue to be excluded from the GST regime and remain subject to central excise duty and state VAT. Such products can be brought within the ambit of GST only upon a specific recommendation by the GST Council, comprising finance ministers from states and the Centre.
The primary concern, particularly among states, is that subsuming these commodities under GST would lead to a revenue shortfall.
"A policy change that includes these items under GST, along with a system to protect state revenues, would simplify the tax structure, ease cash flow issues for businesses, and support the original goals of GST," the report added.
In the GST Council meeting held in December 2024, states rejected a proposal to include ATF, or jet fuel, under GST.
Goods and Services Tax (GST), launched on July 1, 2017, completes eight years on Monday. GST subsumed about 17 local taxes and 13 cesses into a five-tier structure, simplifying the tax regime.
Over the last 8 years, the average monthly GST collection rose from Rs 90,000 crore in 2017-18 to Rs 1.84 lakh crore in 2024-25 (April-March). The collections touched a record high of Rs 2.37 lakh crore in April 2025.
"GST in India now stands at a critical juncture where aligning with global trade dynamics is essential. The evolving landscape of international trade, coupled with the growing need to attract investments in the manufacturing and global capability centre (GCC) sectors, calls for a GST framework that is agile, investor-friendly, and globally competitive," the PwC report said.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab
"A transition from 4-tier to a 3-tier rate structure would reduce interpretational disputes, improve tax certainty and simplify compliance," PwC said.
A comprehensive review of GST rate slabs is required to minimise the disparity between the GST rate on inputs as against that on output, especially for sectors such as electronic vehicle, aviation and e-commerce, which face credit accumulations on account of the inverted tax structure, it added.
PwC also made a case for levying GST on petroleum products, starting with Aviation Turbine Fuel (ATF), to remove the cascading effect and cash flow problem of the industry.
Petrol, diesel, natural gas and other petroleum products continue to be excluded from the GST regime and remain subject to central excise duty and state VAT. Such products can be brought within the ambit of GST only upon a specific recommendation by the GST Council, comprising finance ministers from states and the Centre.
The primary concern, particularly among states, is that subsuming these commodities under GST would lead to a revenue shortfall.
"A policy change that includes these items under GST, along with a system to protect state revenues, would simplify the tax structure, ease cash flow issues for businesses, and support the original goals of GST," the report added.
In the GST Council meeting held in December 2024, states rejected a proposal to include ATF, or jet fuel, under GST.
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