The central government has quietly resumed top-level discussions to rework India’s Goods and Services Tax (GST) structure, reports The Economic Times. The aim: to simplify the current system, streamline compliance, and give Indian industries a better shot at competing globally.
Launched in July 2017, GST was pitched as a one-nation-one-tax system, replacing a tangle of state and central levies. But the current structure—with its multiple slabs and complicated compliance layers—has drawn sharp criticism from both businesses and tax experts. Now, with the compensation cess nearing its end and new trade agreements with the UK and US in sight, policymakers seem ready to rethink the framework.
Officials involved in the process suggest that the government isn’t looking for a quick fix. “Small changes won’t cut it anymore,” said one official. The thinking is that if GST is to deliver on its promise, then deeper structural reforms must take centre stage—both in how the tax is designed and how it is administered.
The compensation cess, originally meant to offset revenue losses for states post-GST, is on its last legs. With this safety net vanishing, many see this as the right moment to hit the reset button.
One of the hot topics on the discussion table is the number of GST slabs. Currently, the system uses multiple rates, and critics say it leads to confusion and compliance headaches. The chatter now is about moving towards a cleaner, three-slab model that’s easier for everyone to work with—businesses, consumers, and tax officers alike.
Industry bodies are not only pushing for fewer rates but also for simpler rules, more clarity, and better enforcement. Several have flagged concerns over dual authority checks and what they describe as “overzealous” enforcement by field officers.
India is busy locking in trade deals with major economies like the UK and US. And if local taxes are too complex, domestic companies might find themselves on the back foot.
“Competitiveness of India Inc is key,” reportedly noted another official, highlighting that the ease of doing business is tightly tied to how taxes play out on the ground.
The GST Council—the body that decides on all things GST—had earlier formed a group of ministers back in September 2021 to look into rate revisions. However, there’s been little visible progress so far, mostly due to divergent views across states.
Some proposals floating around include introducing dual rates for certain categories and fixing price bands for luxury goods. But experts caution that such tweaks, if not thought through, could add more confusion rather than resolving existing complexities.