Low GST collections highlight need for structural reforms and removal of compensation cess.
The article discusses the need for structural reforms in India's Goods and Services Tax (GST) system, prompted by the lowest tax collections in some time, with June 2025 collections at ₹1.85 lakh crore, showing the slowest growth rate in four years. It highlights inefficiencies and calls for the inclusion of fuel and alcohol under GST, despite State resistance. The author argues that the Centre should increase States' share in central taxes and stop relying on non-shareable cesses. A key reform suggested is reducing the number of GST rates and, importantly, removing the GST Compensation Cess, which was extended until March 2026 to repay loans but is no longer needed for its original purpose.
Key Points
- GST collections in June 2025 were the lowest in four months, indicating a dip in economic activity and system inefficiencies.
- Structural reforms are needed, including bringing fuel and alcohol under GST, despite State resistance.
- The Centre should increase States' share in central taxes and reduce reliance on non-shareable cesses.
- The GST Compensation Cess, extended until March 2026, should be removed as its original purpose is fulfilled.
Exam Facts
- GST's eighth anniversary was on July 1.
- June 2025 GST collections stood at ₹1.85 lakh crore.
- This represents a 6.2% growth rate, the slowest in four years.
- The GST Compensation Cess was extended until March 2026.
Read it. Retain it. Recall it.
Get spaced-repetition flashcards, daily quizzes and offline access — free on Android.