India Inc. backs GST as trusted digital tax ecosystem, seeks GST 2.0 reforms: Deloitte

As the Goods and Services Tax (GST) completes nine years, Indian businesses are backing its transformation into a nationwide digital tax ecosystem and are now pushing for the next phase of reforms centred on artificial intelligence, automation, and a more integrated taxpayer experience, according to Deloitte India’s GST@9 survey.

Based on responses from 1,096 business leaders across eight industries, including MSMEs, the survey found near-universal acceptance of GST and outlined a focused reform agenda for what Deloitte describes as “GST 2.0”.

Industry sentiment towards GST remained overwhelmingly positive, with more than 99% of businesses reporting either positive or neutral experiences. Negative sentiment fell to nearly zero from 5% in 2025 and 10% in 2022.

Businesses attributed this improvement primarily to digitalisation of compliance (69%), automation of tax processes (54%), and the stabilisation of e-invoicing and e-way bill systems (48%). Respondents also cited greater transparency, consistency and improved ease of doing business.

“GST has significantly improved compliance and transparency with the GST Network serving as India’s trusted tax framework,” said Gokul Chaudhri, President – Tax, Deloitte South Asia. He said the next stage of GST reform will be shaped by intelligent and integrated capabilities, with 89% of stakeholders identifying AI-led data processing and reconciliation as their top priority. Around 84% supported automatic tax utilisation through the GST portal, while 53% called for a unified taxpayer dashboard.

According to Deloitte, these expectations reflect a broader shift towards embedded intelligence, deeper automation, and seamless digital experiences aimed at improving transparency, certainty and competitiveness.

Industry seeks policy and operational reforms

The survey highlighted tax interpretation ambiguity as the top policy concern for businesses, followed by improving working capital efficiency and addressing the inverted duty structure.

On the operational front, respondents ranked audit uniformity as the highest priority, followed by faster sanction of refunds.

Businesses also favoured reforms aligned with global best practices, including centralised audits (72%), allowing reverse charge mechanism (RCM) payments through input tax credit (ITC) (70%), and further simplification of the GST rate structure (64%).

Mahesh Jaising, Partner and Leader – Indirect Tax at Deloitte India, said recent GST rate rationalisation had reduced classification disputes and supported consumption growth by simplifying the tax structure.

He added that businesses expect the GST Council to prioritise resolving interpretational ambiguities (87%), improve working capital through streamlined refunds and credit utilisation (67%), address ITC-related disputes (57%) and create a harmonised audit framework through technology-led reforms.

The report also called for expanding the inverted duty structure refund formula to include input services and capital goods, particularly in sectors such as pharmaceuticals, food processing, electric vehicles and consumer goods where credit accumulation remains a concern.

Scope to further improve ease of doing business

While respondents acknowledged continued progress under GST, businesses identified several areas for improvement.

Nearly 77% called for stricter timelines for refund processing to improve liquidity. Greater clarity in tax interpretation (87%), ITC eligibility (57%), classification disputes (33%) and reconciliation processes (31%) was also identified as critical to reducing litigation.

Respondents further highlighted the need to strengthen appellate mechanisms, with concerns focused on independent review (70%) and disposal timelines (53%).

The survey showed strong confidence across sectors despite varying priorities.

Consumer and energy, resources and industrial sectors highlighted supply chain optimisation and working capital efficiency, while technology, media and telecom companies highlighted digital compliance and simplification amid evolving systems.

Banking, financial services and insurance firms, along with global capability centres, prioritised automation and integrated digital infrastructure. Life sciences and healthcare companies cited gains from competitive pricing but flagged export and ITC challenges.

Private equity and venture capital firms welcomed policy responsiveness but sought greater clarity on digital taxation.

MSMEs seek simpler compliance and faster liquidity support

Among MSMEs, the GST experience improved steadily, driven by reforms such as quarterly return filing and threshold relaxations.

Quarterly filing was recognised as beneficial by 67% of respondents, up sharply from 12% in 2023 while 57% supported relaxed thresholds.

MSMEs showed strong support for invoice-based ITC eligibility (88%) and quarterly payment mechanisms (87%). However, liquidity remained a major concern, with nearly 89% favouring automatic interest payments on delayed refunds to ensure more predictable cash flows.