GST 2.0: Grab the chance to make it bold and beautiful

With so much hope pinned on this crucial reform, we must get every fine detail of our GST regime right

- VIVEK JOHRI

Indian Prime Minister Narendra Modi's announcement on Independence Day about launching the next phase of goods and services tax (GST) reforms by Diwali this year adds tremendous heft and seriousness to this long-awaited policy change. There is a lot to be said about its timeliness too—with global headwinds in the wake of US tariff tantrums having dampened sentiment considerably in India's manufacturing and export sectors. The package not only clearly articulates the Centre's vision of a reformed GST, but also pushes all the right buttons: we can expect a neater, less dispute-prone and stable rate structure; correction of rate-structure inversions; ease of living for businesses, with the streamlining of three key business processes of registration, return filing and refunds; a reduction in tax incidence for a wide array of constituencies ranging from students and women to the middle-class and farmers, with the burden eased on items of mass consumption as well as 'aspirational' goods. The package on its way also acknowledges the need for stability in the rate structure, which is music to the ears of change-fatigued stakeholders.

In many ways, the level of ambition goes far beyond what was expected.

First, what has been figural so far is mainly rate rationalization and the fate of the GST compensation cess. The current proposal, however, also goes into the administrative realm to address day-to-day pain points for businesses. It seeks to improve the mechanism for registration, return filing and refunds through greater use of technology.