India’s GST Council is preparing for a pivotal meeting, moving away from rate cuts towards structural fixes aimed at clarity, dispute reduction, and adapting to new business models as the tax regime approaches its tenth year.
India’s GST Council is preparing for a potentially pivotal meeting as the tax regime approaches its tenth year, with attention shifting away from rate cuts and towards structural fixes that could make compliance clearer and disputes less common. According to Grant Thornton Bharat’s Manoj Mishra, the next stage of reform should prioritise trust, certainty and simplicity rather than merely widening the tax base.
One of the most pressing issues is litigation. The Supreme Court’s ruling in the Gameskraft matter has triggered fresh alarm for the online gaming industry, where retrospective GST demands are estimated at about Rs 2.5 lakh crore after the court treated online gaming, fantasy sports and casino activity as betting and gambling. The industry had long paid tax on platform fees at 18%, based on the then-prevailing view that skill-based games were distinct from games of chance. Mishra said Section 11A of the CGST Act could be used to regularise tax positions that arose from widely followed trade practices.
Another major flashpoint is input tax credit, or ITC, the system that allows businesses to offset tax paid on purchases against their output liability. At present, a buyer’s ability to claim credit can depend on whether a supplier has actually remitted the tax to the government, a requirement that has repeatedly led to disputes even where the purchaser has acted properly. Grant Thornton says the Council could consider a safe-harbour rule for recipients that hold valid invoices, have received the goods or services, have paid through banking channels and have not colluded in any default.
Clarity is also needed on the treatment of compensation cess credits as the levy is set to be phased out on specified goods from February 1, 2026, according to the related summaries. Businesses want a clear roadmap for handling accumulated credits built up under the old framework. At the same time, long-running questions over whether petrol, diesel, aviation turbine fuel and natural gas should be brought into GST remain unresolved, despite the distortion created by their exclusion from the system.
The digital economy is another area where the rules have struggled to keep pace with new business models. Section 9(5) of the CGST Act, which deals with tax liability in certain platform-based services, has created uncertainty for app-based passenger transport. The Council could examine a functional test based on how much control a platform actually exercises, while also deciding whether such operators need registration in every state where drivers work or whether a centralised compliance model would be allowed. As GST enters a second decade, the broader message from tax advisers is that the regime’s next reforms will be judged less by headline rates than by whether they make the system easier to understand and harder to challenge.
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