Get GST reform rolling: Review rate slabs
₹20.2 trillion, up 11.7%. Last fiscal year’s monthly average GST mop-up was ₹1.68 trillion, up from ₹1.5 trillion the year before. It seems we can finally close the long chapter of shortfall-compensation for states after the mid-2017 switchover to GST from multiple central and state taxes that got subsumed by this uniform levy across the country.
The government’s five-year deal with states to plug their gaps in case they fell short of a projected GST-revenue incline ended in mid-2022, but the pay-out for this was so large that a cess imposed on top of GST for some goods had to be extended till March 2026 just to pay off the debt taken to fully compensate states. Now that our GST intake—which is split by the Centre and states—is finally showing a steady upward trend, perhaps that loan can be foreclosed and the cess dropped ahead of time. As cesses add to taxation complexity, it would mark a small win for the idea of a “good and simple tax," as GST was meant to be.
Sustainable relief from a revenue crunch also makes space for GST reforms to simplify how it is levied in India. This is what the GST Council must turn its attention to at the earliest. Let’s recall why GST adoption was hailed as a critical reform.
Its uniformity, which made India ‘one market’ for the ease of business, was one aspect. Its fostering of specialization along value chains was another. As a tax applied only to value addition by a taxpayer (with input-tax credits available), GST was designed to prevent tax bills bloated by one levy upon another.
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