Eight years of GST rollout: Stabilisation in revenue opens doors for reforms

Experts call for phased inclusion of petroleum products, lowering tax slabs.

New Delhi: Revenue collection from the Goods and Services Tax (GST) nearly doubled in the past five years surging to a record high of Rs 22.08 lakh crore in FY 2024-25 from Rs 11.37 lakh crore in 2020-21 giving room for rate rationalisation and reforms in the indirect tax system, experts said.

The Goods and Services Tax (GST), which was rolled out on July 1, 2017, replaced 17 local taxes and 13 cesses with a unified indirect tax system.

In 2020-21, the total collection was Rs 11.37 lakh crore, with a monthly average of Rs 95,000 crore. The following year, it rose to Rs 14.83 lakh crore, and then to Rs 18.08 lakh crore in 2022–23. In 2023–24, GST collections reached Rs 20.18 lakh crore, showing consistent growth in compliance and economic activity, official data showed.

GST revenue collection jumped to Rs 22.08 lakh crore in the financial year ended March 2025, registering a year-on-year growth of 9.4%. The average monthly collection in 2024-25 stood at Rs 1.84 lakh crore.

“The monthly GST collections have become a reliable indicator of economic activity, reflecting both improved compliance and robust consumption patterns,” said Mahesh Jaising, Partner and Indirect tax leader, Deloitte India.

Analysts said sustained rise in revenue would provide a cushion for the government to lower tax slabs and bring petroleum products under the GST framework.

“The next phase GST 2.0, must focus on four priorities: expanding the tax base by bringing in sectors like petroleum and electricity; rationalizing the GST rate structure, minimizing input tax credit restrictions and streamlining audits and investigations,” said Bipin Sapra, Partner and Indirect Tax Policy Leader, EY India.

“As India aspires to become a $5 trillion economy, GST must evolve from being a stabilising force to becoming a strategic enabler of ease of doing business, investment, and inclusive growth,” Sapra added.

In a note released on the eve of the eighth anniversary of GST rollout, PwC India called for phased inclusion of petroleum products, starting with Aviation Turbine Fuel (ATF).

Petrol, diesel, natural gas and other petroleum products continue to be excluded from the GST regime and remain subject to central excise duty and state VAT. The primary concern, particularly among states, is that subsuming these commodities under GST would lead to a revenue shortfall.

“Excluding these products, which make up a large part of costs for industries such as oil and gas, transport and logistics, has resulted in significant tax cascading and caused cash flow problems for businesses. A policy change that includes these items under GST, along with a system to protect state revenues would simplify the tax structure, ease cash flow issues for businesses, and support the original goals of GST,” PwC said.

“Despite challenges such as initial disruptions and ongoing adaptations, GST has largely contributed to the country’s economic growth, reflecting its importance in India’s fiscal landscape,” said Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co.