🧾 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?
🔹 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).
🏗️ 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
🔸 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.
🔍 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.
📌 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.
📌 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.
📌 PwC recommends starting with ATF under GST—earlier rejected by states in Dec 2024.
💡 Why States Resist?
·
Revenue
shortfall fears.
·
Petroleum
products are major state revenue sources.
·
Any change needs GST Council consensus (Centre + States).
👉 PwC proposes revenue protection mechanisms for states to ease the transition.
📈 Global Perspective
·
Many advanced economies have unified tax systems with fewer slabs.
·
India must align with global tax practices to attract manufacturing & GCC investments.
📌 Simplified GST will make India more competitive in global supply chains.
📘 UPSC Mains Angle: Possible
Questions
📊 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.
🧠 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
🎯 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).
📚 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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