GST 2.0? Council Considers Major Overhaul of Tax Slabs
Nearly 6 years after the rollout of India’s landmark Goods and Services Tax (GST), the council is now working on a plan dubbed “GST 2.0” — a major overhaul of tax slabs and compliance structures aimed at streamlining the tax regime and boosting revenue without burdening small businesses.
The Slab Simplification Plan
The biggest proposed change is the merging of the 12% and 18% slabs into a new unified rate of 15%. This, policymakers believe, will reduce classification disputes and minimize input tax credit (ITC) blockages.
Stakeholder Response
While most economists have welcomed the move, several sectors have expressed concern. FMCG and restaurant lobby groups argue that a flat 15% could raise consumer prices. The government is reportedly evaluating item-wise impact assessments before finalizing the rate.
Compliance Tweaks
The council is also expected to reduce the frequency of GSTR-3B filings for micro enterprises and automate e-invoicing thresholds using AI tools. A pilot is already underway in Gujarat and Maharashtra for real-time tax reconciliation APIs.
Why It Matters
GST collections have plateaued at ₹1.6 lakh crore per month. A cleaner structure could nudge compliance upward and reduce litigation. India’s Ease of Doing Business rank — stuck in the 60s — could benefit from this simplification.
Timeline
A white paper is expected in July 2025 with phased implementation across FY26. The reform may also dovetail with India’s push for unified national e-commerce tax logic via ONDC.