GST reforms present an opportunity to make bold decisions and “do wonders” for the economy, experts say

With the 56th meeting of the GST council convening today, a lot is being expected from the outcome of the meeting. M.S. Mani, partner, Deloitte India, says that reforming the current tax structure at this point has presented an opportunity to make it a really “good and simple tax.”

“We have to bear in mind that a reform of this magnitude has not been undertaken ever since GST was introduced. It’s an eight-year-old tax now,” avers Mani, adding that the level of changes that are proposed to be made in that tax would “do wonders” to the economy and to everyone’s lives.

However, he says that the caveat that needs to be borne in mind is that GST is an indirect tax, it is not in the nature of tax reforms which impact on a daily basis. “It is something which is going to impact the pricing, the logistical distribution of warehousing. It is certainly going to impact the IT systems of organisations, and it is going to require an all-round, organisation-wide change.”

Over the next few days, Mani avers that there are going to be a lot of changes in rates, procedures and processes being made far simpler. “Whether it is a requirement of registration, the manner in which refunds are sanctioned, the manner in which audits are conducted, we expect to see a lot change in all of this.”

Mani also says that some of the changes will take effect immediately, while others will be implemented a few days later, and some may require legislative changes. “At a broad level, the expectation is that GST will become a completely good and simple tax,” he added.

According to Krishan Arora, Partner, Grant Thornton Bharat, the GST Council meeting is an event that could genuinely shape the next phase of India’s tax regime and economic momentum. “The economy has delivered a strong 7.8% GDP growth in the first quarter, and August GST collections crossed ₹1.86 lakh crore,” added Arora. The economic resilience gives the council some “breathing space” to think bold, not only about simplifying the structure, but also to give a push to household consumption ahead of the festive season.

Arora believes that there are broad themes to take centre stage—first being rate rationalisation. “This is where the spotlight will be. Sectors like automobiles, FMCG, and consumer durables, pharma, textiles, and footwear, could see an immediate benefit.” A reduction of the GST rate for small cars from 28% to 18% could also unlock pent-up demand and benefit the entire value chain, he added. “Moving packaging essentials to the 5% bracket would directly uplift consumption, with positive spillovers in retail and logistics.”

However, rate cuts alone would not suffice, Arora avers. “Unless the inverted duty structure is corrected, manufacturers will continue to face blocked working capital and competitive challenges which will align with the inverted duty structure.”

The second theme is reducing disputes and easing compliance. “The second key expectation is clarity and simplification. Over the years, taxpayers have struggled with grey areas…any move towards raising prosecution thresholds, streamlining adjudications and issuing clarification can significantly reduce litigation and build the trust that is needed,” he explained.

The third theme is balancing revenue needs with compensation to states. “Strong collections have given the council some fiscal breathing space, but stability of state finances is still a pressing concern. States still rely on compensation, and uncertainty around the future of the cess framework makes them cautious about supporting bold rate cuts. That’s why clear guidance on cess revenues will be managed, and how fiscal transfers to states will be sustained is essential, I believe,” Arora explains.

The global backdrop makes the GST reforms makes it all the more urgent, says Arora. “With fresh U.S. tariffs creating uncertainty around exports, increasing domestic demand becomes not just a policy choice, but also as an economic shield. In that sense, rate rationalisation is a strategy that levers to anchor the growth in domestic consumption, and also strengthens the resilience of supply chains.”