The 57th GST Council meeting is poised to mark a pivotal shift in India's indirect tax architecture, with the agenda expected to move well beyond rate rationalisation toward reducing litigation, fortifying input tax credit (ITC) protections, resolving legacy credit disputes, and embedding technology into compliance — as the Goods and Services Tax enters its tenth year. According to a report released on Saturday, 29 August, the meeting could set the tone for what analysts are calling GST 2.0.

The Case for a Trust-First Reform Agenda

Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said the Council's next phase should shift its emphasis from expanding the tax base to building trust, certainty, and simplicity into the system. The first decade of GST was largely about structural consolidation; the second, he argued, must prioritise taxpayer confidence and legal predictability.

Online Gaming and the Gameskraft Overhang

One of the most consequential reform areas is litigation reduction, and nowhere is this more acute than in the online gaming sector. The Supreme Court's ruling in the Gameskraft case has cast a long shadow, with retrospective GST demands estimated at nearly ₹2.5 lakh crore — calculated on full face value of bets from 1 July 2017 — after the court treated online gaming, fantasy sports, and casino activities as betting and gambling.

The industry had for years paid GST at 18% on platform fees, relying on the prevailing legal distinction between games of skill and games of chance. Review petitions against the judgement are pending. Mishra noted that Section 11A of the CGST Act could offer a legislative route to regularise tax positions arising from generally prevalent trade practices, potentially providing relief to compliant operators.

Strengthening Input Tax Credit Protections

A second major reform area concerns ITC eligibility. Under the current framework, a buyer's right to claim input tax credit can be denied if the supplier fails to deposit tax with the government — a situation that leaves compliant purchasers exposed to liabilities they have no practical means to prevent or detect.

The Council is reportedly considering a legislative safe harbour for recipients who hold valid tax invoices, have received goods or services, have paid through banking channels, and have not colluded with non-compliant suppliers. Such a safeguard would reinforce the seamless credit chain that is foundational to GST's design.

Compensation Cess and Petroleum: Two Unresolved Legacies

The transition away from compensation cess — recommended for discontinuation on specified goods from 1 February 2026 — remains a live concern for businesses sitting on accumulated credits under the earlier regime. Clear resolution on how these credits will be treated is expected to feature in the Council's deliberations.

Separately, the question of bringing petrol, diesel, aviation turbine fuel (ATF), and natural gas under the GST framework is likely to resurface. These fuels remain outside the GST net, creating multiple layers of embedded taxation that inflate costs across manufacturing, logistics, and transportation. Notably, this issue has been deferred at multiple prior Council meetings, making any concrete movement significant.

Digital Economy and Platform Taxation Clarity

The rapidly evolving digital economy presents a sixth reform frontier. The application of Section 9(5) of the CGST Act to app-based passenger transportation platforms has generated legal uncertainty as business models evolve faster than regulatory frameworks.

The Council could consider establishing a functional test based on the actual degree of operational control a platform exercises over service delivery. Additionally, clarity is needed on whether such operators must register for GST in every state where their drivers operate, or whether a centralised compliance mechanism can be permitted — a question with significant compliance cost implications for the gig economy.

With the GST Council's 57th meeting approaching, the reform agenda reflects a maturing tax system confronting the structural contradictions of its first decade. Whether the Council translates these recommendations into binding legislative changes will determine whether GST 2.0 delivers on its promise of a truly unified, litigation-light indirect tax regime.