๐งพ GST at 8: Time for Reform or Retrospection?
A Critical Milestone in India’s Tax Landscape |
For UPSC Aspirants by Suryavanshi IAS
“One Nation, One Tax” was the dream. Eight years later, is India ready for One Simpler Tax?
๐น What’s the News?
As the Goods
and Services Tax (GST) completes 8
years on June 30, 2025, a
PwC India report has proposed
critical reforms:
·
Reduce GST
slabs from 4 to 3
·
Include
petroleum products (starting with ATF) under GST
·
Broaden the
tax base and simplify compliance
This news is not just an economic update—it is a potential UPSC question, both in Prelims and Mains (GS III: Economy).
๐️ GST in Brief: A Quick Recap for
Aspirants
·
Launched:
July 1, 2017
·
Replaced:
17 local taxes and 13 cesses
·
Current
Slabs: 5%, 12%, 18%, and 28%
·
High Slab:
28% for luxury & demerit goods
·
Low Slab:
5% for essentials
๐ธ GST revenue collections soared from ₹90,000 crore/month (2017-18) to ₹1.84 lakh crore (2024-25). In April 2025, it peaked at ₹2.37 lakh crore.
๐ Why Is Reform Needed Now?
1. Complexity in Slabs
·
Four slabs confuse businesses, especially SMEs.
·
Example: Some packaged foods fall under both 5%
and 12%, leading to litigation and disputes.
๐ PwC suggests a 3-tier structure to reduce disputes and increase compliance ease.
2. Inverted Duty Structure
·
Occurs when inputs are taxed higher than outputs.
·
Common in EVs,
aviation, and e-commerce, resulting in credit accumulation and cash flow problems.
๐ This distorts market competitiveness and investor confidence.
3. Exclusion of Petroleum Products
·
Petrol, diesel, natural gas, and ATF are outside GST, still taxed under central
excise + VAT.
·
This leads to cascading taxes, especially for logistics and aviation.
๐ PwC recommends starting with ATF under GST—earlier rejected by states in Dec 2024.
๐ก Why States Resist?
·
Revenue
shortfall fears.
·
Petroleum
products are major state revenue sources.
·
Any change needs GST Council consensus (Centre + States).
๐ PwC proposes revenue protection mechanisms for states to ease the transition.
๐ Global Perspective
·
Many advanced economies have unified tax systems with fewer slabs.
·
India must align with global tax practices to attract manufacturing & GCC investments.
๐ Simplified GST will make India more competitive in global supply chains.
๐ UPSC Mains Angle: Possible
Questions
๐ Prelims Practice Questions
Q1.
Which of the following is/are true about GST in India?
1.
Aviation Turbine Fuel is currently under GST.
2.
GST replaced both central and state indirect taxes.
3.
GST follows a dual model in India.
๐ง Mains Answer Writing Practice (GS
III)
Q.
GST has achieved consolidation but not
simplicity. Critically examine in the context of the recent PwC
recommendations.
Approach:
·
Intro: 8 years of GST—achievement and
complications
·
Body: 4 slabs, revenue trends, inverted duty
issue, petroleum exclusion
·
Suggestions: 3-tier system, ATF under GST,
revenue protection
· Conclusion: Way forward for GST 2.0
๐ฏ Final Takeaway for Aspirants
GST reform is not just about economic numbers—it reflects federalism, cooperative decision-making, and institutional evolution. It is a living topic in UPSC and can appear in unexpected sections like Polity, Economy, or Ethics (cooperation between Centre and States).
๐ Learn Smarter with Suryavanshi IAS
“It’s not about how much you study, but how deeply you connect the dots.” – Suryavanshi IAS Faculty Panel
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