A comprehensive overhaul of the Goods and Services Tax (GST) regime, referred to as GST 2.0, is in the works, with the government aiming to address long-standing disputes and structural challenges in India’s indirect tax system. Officials confirm that the GST Council is likely to meet on September 18–19 to deliberate on the proposed reforms.
Unlike earlier tweaks that primarily focused on rate adjustments, the new framework seeks to resolve classification conflicts, inverted duty structures, and operational bottlenecks, while ensuring businesses face fewer disputes. The plan includes greater coordination between central and state tax authorities to avoid repeated scrutiny of the same issues during assessments, audits, and investigations.
Prime Minister Narendra Modi had flagged these upcoming changes in his Independence Day address, calling them a “Diwali gift” for citizens.
Key Features of GST 2.0
- Rate Rationalisation: The proposal reduces GST slabs to primarily two rates — 5% and 18%, replacing the current four-tier structure.
- Elimination of Middle Slabs: The 12% and 28% categories are set to be scrapped.
- Essential Goods Relief: Items such as essential commodities, agriculture-related products, and healthcare goods are expected to attract only 5% tax.
- High-End Goods Levy: A 40% special rate will apply to luxury cars, sin goods, and a few other high-value items.
- Certainty in Classification: Price variations will no longer influence the tax categorisation of identical products, a move aimed at ending courtroom battles over classification disputes.
Officials confirmed that each item and its related issues have undergone rigorous examination before the recommendations were sent to the GST Council’s Group of Ministers (GoM).
GST 2.0 Impact on Businesses and Economy
Experts suggest that the revamp could boost compliance, improve ease of doing business, and stimulate domestic consumption. By removing ambiguities in tax treatment, the government expects more stability for industries, particularly MSMEs and consumer-focused sectors.
If approved, the changes are expected to be rolled out ahead of the festive season, with the government optimistic that the simplified GST structure will give a fresh push to economic growth.
