GST reforms needed despite strong May 2026 collections, say experts

Despite robust GST collections of Rs 1,94,184 crore in May 2026, tax experts are calling for major structural reforms. Key demands include easing input tax refunds, including petroleum under GST, and fixing inverted duty structures.

Tax experts have called for structural reforms in the Goods and Services Tax (GST) 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.

Reforms for Competitiveness and Liquidity

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.

GST Regime Shows 'Growing Maturity'

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.

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)