The Indian finance ministry is in talks with industry leaders about GST 2.0, a potential overhaul of the Goods and Services Tax. With GST nearing its eighth anniversary in July, the aim is to simplify the complex tax structure and address existing challenges.
Why the Push for GST 2.0?
Currently, India’s GST operates with multiple rates, leading to frequent disputes over product classification and increasing the burden of compliance for businesses. Industry representatives are pushing for a three-rate structure—likely 5%, 18%, and 28%—to streamline the system. They also want simpler classification rules to cut down on litigation and enhance overall tax compliance.
Who’s Involved?
The powerful GST Council, chaired by Union Finance Minister Nirmala Sitharaman, is at the heart of these discussions. A dedicated Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, is actively working on proposals for rate rationalization and simplification.
What’s Next?
While the GoM deferred its report in December 2024, a GST Council meeting is expected soon, possibly in early July. The finance ministry is exploring various options to balance revenue concerns from states with the need for a simplified tax regime. The hope is that GST 2.0 will usher in a more efficient, less litigious, and more transparent indirect tax system for India.