8 Years of GST: PwC Recommends Simplified Tax Slabs and Inclusion of Petro-Products


8 Years of GST: PwC Recommends Simplified Tax Slabs and Inclusion of Petro-Products





As the Goods and Services Tax (GST) in India marks its 8th anniversary on July 1, 2025, leading consultancy firm PwC India has called for key structural reforms to strengthen the tax framework and make it more globally competitive.

According to the report, the GST Council, consisting of finance ministers from both the Centre and States, should focus on simplifying compliance, reducing the tax slabs from four to three, and expanding the tax base by including petroleum products under the GST regime.

GST, introduced in 2017, successfully unified 17 different local taxes and 13 cesses into a common five-tier tax structure, bringing uniformity to India’s indirect tax system.

Over the years, monthly GST collections have shown robust growth, rising from ₹90,000 crore in FY 2017-18 to ₹1.84 lakh crore in FY 2024-25, with a record high of ₹2.37 lakh crore in April 2025.

PwC notes that India’s GST system needs modernization to align with evolving global trade trends and attract more investment into manufacturing and Global Capability Centres (GCCs).

The report suggests a shift from the current four-tier tax structure (5%, 12%, 18%, 28%) to a more streamlined three-tier system. This change could help minimize disputes, boost clarity, and ease compliance.

Furthermore, PwC emphasizes the need to review GST rates to address issues such as inverted duty structures. Sectors like electric vehicles, aviation, and e-commerce often face difficulties due to input taxes being higher than output taxes, leading to credit accumulation.

A major recommendation is to bring petroleum products, beginning with Aviation Turbine Fuel (ATF), under the GST umbrella. This move could eliminate cascading taxes and ease cash flow challenges in these sectors.

Currently, items like petrol, diesel, natural gas, and other petroleum products are excluded from GST and are subject to central excise and state VAT. These can only be included through a GST Council recommendation.

However, States remain cautious, fearing that inclusion could lead to loss of revenue. To address this, PwC proposes a policy framework that protects state income while ensuring simplified taxation and better business efficiency.

In a previous GST Council meeting (December 2024), States rejected a proposal to bring ATF under GST, highlighting the ongoing resistance to broadening the GST base.

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