Is GST 2.0 a Process Reform for Efficiency?
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Synopsis
Discover how Sanjeev Sanyal emphasizes that the new GST 2.0 framework is more than just about revenue; it's a transformative process reform aimed at enhancing efficiency in India's tax system. With significant changes on the horizon, this article delves into the implications of these reforms and their potential impact on businesses and consumers alike.
Key Takeaways
- GST 2.0 aims to enhance efficiency in India's tax system.
- The new framework introduces a two-slab structure.
- Tax rates on essential goods will be reduced.
- Implementation of reforms is crucial for business growth.
- Common sense will guide tax classifications.
New Delhi, Sep 9 (NationPress) Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister, stated on Tuesday that the revised GST 2.0 framework is fundamentally a process reform aimed at enhancing efficiency instead of merely increasing revenue collection.
During his address at NDTV Profit's GST Conclave, he elaborated that the simplification of tax slabs represents a significant transition towards streamlining the system and eliminating unnecessary complexities.
"India's revamped GST framework has been finally rationalised to enhance simplicity and efficiency," he remarked.
Sanyal noted that the government has been striving for this rationalisation for over a year, but the implementation was postponed until India's fiscal framework was on a stronger footing post-Covid-19.
"Reducing and rationalising rates will lead to a temporary dip in tax collection," he clarified, mentioning that previous decisions to place certain goods in higher tax brackets were not strategically driven but rather aimed at avoiding disruptions.
"For instance, cement was placed in the 28% slab simply because it was the least disruptive option," he pointed out.
He reminisced about earlier discussions regarding tax rates even delving into debates over "whether to tax salty vs. caramel popcorn," but now the tax system is more transparent.
"With this rationalisation, common sense will largely guide which items fall under which slab," he added.
The senior economist also highlighted that the "inspector raj had returned to the GST registration process," but asserted that the framework has now been refined.
He stressed that while India might have already implemented most significant structural reforms, what is currently required are "thousands of process reforms" to facilitate seamless governance and ease of business.
On a wider economic scale, Sanyal mentioned that India possesses both fiscal and monetary space to bolster micro, small, and medium enterprises.
The GST Council recently sanctioned a new two-slab structure, abolishing the 12% and 28% brackets, reducing taxes on daily essentials like ghee, butter, roti, shampoo, hair oil, and toothpaste, while raising taxes on certain selected items.
Finance Minister Nirmala Sitharaman announced that the new rates will be effective from September 22, coinciding with the first day of Navratri.
Point of View
The GST 2.0 reforms represent a crucial step towards simplifying India's complex tax landscape. The focus on efficiency rather than just revenue maximization is a much-needed shift, reflecting a commitment to creating a business-friendly environment. As industries adapt to these changes, the potential for enhanced economic growth becomes evident, aligning with the nation's broader goals.
NationPress
09/09/2025
Frequently Asked Questions
What is GST 2.0?
GST 2.0 is a revamped framework of India's Goods and Services Tax aimed at improving efficiency and simplifying tax structures.
How will GST 2.0 affect small businesses?
The new GST structure is expected to ease compliance burdens on small businesses, providing them with a more straightforward tax regime.
When will the new GST rates take effect?
The new GST rates will come into effect on September 22, coinciding with the start of Navratri.
What changes are included in the new GST structure?
The new structure introduces a two-slab system, lowering taxes on daily essentials while increasing levies on select items.
Why was the old GST framework considered complex?
The previous GST framework had multiple tax slabs leading to confusion and challenges in compliance for businesses.
