As India marks eight years since the introduction of the Goods and Services Tax, PwC India’s latest report recommends a much-needed second phase of reforms.
Rationalise GST Slabs
PwC proposes collapsing the current 5%, 12%, 18%, and 28% slabs into a simpler 3-tier structure. A streamlined rate system would reduce classification disputes and improve compliance.
Include Petro-Products under GST
Currently kept out of GST, petroleum products lead to cascading taxes and higher input costs across industries. PwC suggests phasing in products like Aviation Turbine Fuel (ATF) to begin with, gradually bringing petrol and diesel under the net, aligning the tax framework with a unified value chain.
Reconsider Compensation Cess
The compensation cess has outlived its original five-year horizon. Its continuation creates credit blockages for businesses and complicates the credit flow mechanism. Integrating it into the GST structure or removing it could address this pain point.
These changes aim to make GST not just a revenue-raising mechanism but a genuine economic enabler, boosting investment, supporting Make in India, and offering certainty to businesses.