Not just a stimulus: GST 2.0 is a foundational reform

It's an economic growth enabler that sets the stage for ideas like a market for input tax credit scrips

- SANJEEV KRISHAN

Introduced as a symbol of cooperative federalism in 2017, India's goods and services tax (GST) replaced a fragmented tax system with a unified national indirect tax framework. The reforms approved in the 56th GST Council meeting reflect a pro-growth and pro-business approach that sets the stage for greater economic expansion, tax compliance and investor confidence.

From complexity to clarity: In the last eight years, GST has already delivered substantial dividends—it streamlined indirect taxes, dismantled inter-state barriers and curbed the cascading effect of levies on inputs along value chains. However, operational challenges on account of complexities, compliance burdens, delays and classification disputes held back its full potential. The latest reforms attempt to address these challenges head-on.

The transition to a two-slab structure, rationalization of rates across essentials as well as growth sectors and a pivot to faster refunds as well as dispute resolution are expected to reduce tax uncertainty and compliance costs.

This signals a policy focus on reducing friction, improving the ease of doing business and enabling better capital planning. If implemented well, these reforms have the potential to strengthen India's position as a globally competitive manufacturing and services hub. Clearer classification, fixed duty structures and the correction of inverted duty structures will help boost domestic value addition and exports.