Tax experts seek GST refund reforms, petroleum inclusion under GST as collections stay resilient
New Delhi, June 1
Tax experts have called for structural reforms in the Goods and Services Tax framework, including easing input tax refund provisions, addressing inverted duty structures and bringing petroleum products under GST, even as collections remained strong in May 2026.
Experts said the latest GST collection numbers indicate continued resilience in India's economy despite geopolitical disruptions and higher input costs, but stressed that policy measures are needed to improve liquidity and ease compliance for businesses.
Pratik Jain, Partner at Price Waterhouse & Co LLP, said "Given the increase in input costs due to supply chain issues, this might be a right time for Government to consider providing working capital support to industry by relaxing refund provisions with respect to input GST, which has been accumulating for many businesses".
According to official data, gross GST collections rose 3.2 per cent year-on-year to Rs 1,94,184 crore in May 2026, while cumulative collections for the current financial year increased 6.2 per cent to Rs 4,36,887 crore.
Vivek Jalan, Partner at Tax Connect Advisory Services LLP, also highlighted the need for broader GST reforms.
He said "The upcoming GST Council meeting must address deepened inverted duty structures, particularly refunds on input services, which continue to distort competitiveness. Bringing petroleum products under GST would be a landmark reform to rationalize tax incidence and reduce cascading effects".
He also called for a simpler and more transparent refund mechanism, particularly regarding the classification of certain taxpayers as "risky", to ensure genuine businesses are not affected by delays.
Meanwhile, Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said GST collections remained close to the Rs 2 lakh crore mark even without extraordinary revenue support, indicating growing maturity and stability of the GST regime.
He said "Perhaps more significant is the fact that collections have remained close to the Rs 2 lakh crore mark even without any extraordinary revenue support this year, underscoring the growing maturity and stability of GST regime".
According to experts, while GST revenues continue to demonstrate strength, further policy reforms aimed at improving refunds, reducing tax distortions and easing business liquidity could help sustain growth and strengthen the tax ecosystem in the coming years.
— ANI
Reader Comments
The refund provisions are a genuine pain point. My CA has been chasing refunds for input GST for months now and it's really impacting our cash flow. If they can simplify this process, it would be a huge relief for honest taxpayers.
Interesting to see collections holding up despite global headwinds. The inverted duty structure is a real issue though - it's hurting manufacturing competitiveness. We need rationalization of rates for intermediate goods to make Indian products more competitive globally.
GST is still work in progress after all these years. The 'risky taxpayer' classification worries me - one small error in filing and you're stuck in a loop of scrutiny for months. Need more transparency in how these classifications work. Yaar, compliance should be easy, not a headache!
Good that collections are stable but let's not get complacent. The real test will be if they can maintain this while reducing compliance burden on MSMEs. Input tax credit refunds need to be automated and time-bound - that's the key to unlocking liquidity for the supply chain.
Bringing petroleum under GST is easier said than done - states will lose a huge revenue source and they won't agree easily. But the cascading effect of taxes on fuel is killing every other industry. Some compromise formula needs to be worked out for the greater good.
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