The proposed revamped goods and services tax (GST) 2.0, developed through extensive consultations, aims to be more comprehensive than just rate adjustments. Officials, quoted by Economic Times, indicate it will fundamentally restructure the eight-year-old indirect tax system. The changes focus on resolving classification conflicts, duty inversions and operational challenges to provide businesses with enhanced certainty and stability.The initiative includes enhanced coordination between state and central tax authorities regarding assessment, audit and investigation procedures. This aims to prevent businesses from facing repeated scrutiny for identical issues, according to officials.Officials confirmed that the GST Council will likely convene on September 18-19 to consider these proposed modifications, as reported by ET.Also read: Industry hails PM Modi’s GST slab cut plan; experts see relief for MSMEs and consumersPrime Minister Narendra Modi announced these upcoming GST changes during his Independence Day speech on Friday, referring to them as a “Diwali gift” for the nation.The new structure will feature two primary tax rates – 5% and 18%. A senior official told ET that “Rate rationalisation is one part of the proposal, but it goes much beyond that… This is an opportunity for a wider reform of the structure.” The changes address issues arising from inconsistent court rulings on identical items, alongside challenges related to inverted duty structures and input tax credit.The revamp seeks to eliminate classification disputes arising from varying tax rates for similar products. Officials confirm that price variations will not influence tax categorisation for identical items.The proposal suggests eliminating the 12% and 28% slabs. Essential items, agricultural products and health-related goods are expected to attract 5% tax. A 40% special rate will apply to approximately six items, including sin goods and luxury vehicles.Officials confirm thorough examination of each item and associated issues. The proposal has been forwarded to the GST Council’s group of ministers (GoM) for rate rationalisation, who will review it shortly before presenting recommendations to the Council. “We have examined each item and issues around it,” a second official said, adding. “The idea was to look ahead and not how it was done in the past, line by line… It was an intensive and rigorous exercise.”The Centre plans to discuss these proposals with states, anticipating positive effects on domestic consumption and growth. Officials are working towards implementing changes before the festive season.
