India’s GST council prepares to implement a new phase of reforms focused on enhancing compliance, boosting automation, and reducing the burden on legitimate businesses as it approaches a decade of the tax regime.
India’s Goods and Services Tax Council is expected to use its meeting on Thursday to move the levy’s next phase beyond rate-setting and into the harder task of cleaning up the compliance machinery. After last year’s overhaul of the indirect tax structure, officials and advisers say the focus has shifted to making the system less cumbersome for businesses and more reliant on data and automation.
The shift is being framed as the second stage of GST 2.0, with the council unlikely to tinker materially with rates at this meeting apart from possible clarifications. According to people familiar with the discussions, the aim is to resolve inconsistencies in the current framework and align implementation more closely with the principles behind the original reform. Reuters-style reports in Indian financial media have said the proposals follow months of consultation with states through national coordination meetings and working groups of officials.
One of the central themes is enforcement. The council is understood to be considering a higher threshold for launching prosecution, from ₹1 crore to ₹5 crore, as well as curbs on arrest powers, with any detention to require judicial approval. Tax advisers say the broader policy logic is to concentrate enforcement on the relatively small share of non-compliant taxpayers rather than imposing the same burden on the vast majority that already follows the rules. That approach, they argue, is becoming more practical as the tax network now has far more transaction-level data and invoice matching than it did when GST was introduced in 2017.
The business-facing measures under discussion are wider still. According to reports in Mint, the council is looking at faster registration timelines, potentially cutting approval times for most applicants to three working days from more than three weeks. Other proposals reported by Economic Times and Financial Express include protecting genuine buyers when suppliers default on tax remittances, allowing broader input tax credit claims on legitimate expenses such as motor vehicles and group insurance, and easing restrictions around inverted duty structures, where tax on inputs is higher than on finished goods.
Refunds are also expected to be a major part of the package. Sources quoted in the financial press say the government wants more automation in processing claims so that a large share of eligible refunds can be released without repeated manual intervention. That would be especially significant for exporters and other businesses whose working capital is often tied up while refund applications are examined. Tax experts say the bigger picture is a more centralised, technology-led administration with fewer disputes, less discretion and a steadier tax regime as GST approaches its tenth year.
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