Giving a push to process reforms

Tomorrow's GST Council meeting may be less exciting, but no less important than the last one

Nine years, three months and six days ago, India saw the launch of its biggest indirect-tax reform — the goods and services tax (GST). About nine and a half months prior to that launch, the GST Council, a constitutional body, was set up with the power to make all key decisions on GST rates and slabs. That was on September 12, 2016.

 

 Between the formation of that constitutional body and the launch of the new tax system, the GST Council met 18 times. Such a high frequency of Council meetings was understandable, given that a major taxation reform was being rolled out, requiring massive preparatory work through consultation. Also, since India adopted a dual GST model (with both the Union and state governments levying the tax on the same products and services), a permanent joint platform like the GST Council became necessary. In most other countries with GST (including even the few that have adopted the dual GST model), this function is performed by their respective legislative bodies, which undertake tax rate reviews annually as part of the budget process.

 

In India, the frequency of GST Council meetings, however, has slowed considerably since the launch of the new tax system. Only 38 meetings took place between July 1, 2017, and September 3-4, 2025 — fewer than five meetings per year on average. Significantly, the number of meetings in a year has gradually declined as the GST system has stabilised — from eight meetings each in 2017-18 and 2018-19 to five meetings in 2019-20, and settling down to three-four meetings a year in the following five years. In 2025-26, only one GST Council meeting took place, even though its first meeting in September 2016 had suggested it should meet at least once a quarter.

 

 On Thursday (October 8), the 57th meeting of the GST Council is scheduled to take place in New Delhi.

 

The significance of Thursday’s meeting lies not just in the fact that it is being held after a gap of more than a year, but also in the nature of the decisions taken at the previous meeting on September 3 and 4, 2025. Expectations for a meeting held after over a year have therefore risen.

 

The last GST Council meeting undertook the most comprehensive review of the tax system’s rate structure. It changed the rates of over 450 goods and services across a wide range of areas, including agriculture, food, tobacco, fertilisers, coal, renewable energy, textiles, health, education, consumer electronics, paper, transportation, sports goods, toys, leather, wood, defence, footwear, construction, handicrafts, machinery, job work, local delivery, and insurance.

 

Unlike the previous two rounds of rate reviews in November 2017 and December 2018, when rates were only brought down for 94 and 17 categories, respectively, and without changing the slab structure, the GST Council undertook a far more comprehensive exercise in September 2025. This led to a reduction in rates for about 380 goods and 24 services, and an increase in rates for about 40 goods and 10 services. More importantly, almost all goods and services, barring a dozen-odd items attracting a 40 per cent rate, were placed under only two slabs — 5 per cent and 18 per cent. This reduced a multi-tiered tax structure to a three-slab tax system.

 

What happens at the GST Council meeting on October 8, however, will be different. Tomorrow’s meeting is not about rates as any further rationalisation has been taken off the table for the time being, making such reviews an annual exercise. Instead, the meeting will be largely about processes. Therefore, the outcomes from this meeting may not be  as exciting as those from the 2025 meetings. But their significance in real terms for the economy and the ease of tax collection will be huge. Consider the following.

 

As many as 14 sectors are likely to benefit from changes in procedures for assessing and collecting GST, making the process simpler and easier, and facilitating easier refunds and claims for input-tax credit. These are: Agriculture, MSMEs (micro, small and medium enterprises), exporting firms, ecommerce, logistics, infrastructure, automobiles, financial companies, hospitality & tourism firms, health care & pharmaceuticals, real estate & construction, shipping & ports, telecommunications, and manufacturing.

 

 In addition, there are other proposals for reforming the registration process, steps to ensure faster refunds, removal of obstacles to claiming input-tax credit, improving the attractiveness of exports, reducing litigation and providing certainty, decriminalising tax-evasion cases without undermining the process of prosecuting offenders, enabling compliance for digital and technology companies, and introducing a level playing field for companies. The guiding principle behind these changes is to remove inconsistencies and ambiguities that remained unaddressed in last year’s meeting.

 

A couple of examples will indicate how important the proposed changes will be for improving the ease of doing business for ordinary business entities and transporters. A vehicle carrying goods can now be stopped only where there is specific information to act on, ruling out random checks on highways. The decision to stop the vehicle must be authorised beforehand by senior officials. And the vehicle can be stopped only by the state where the goods transportation began. States through which the goods pass and the states where they are supposed to be delivered will not have the power to intervene. For speedier goods movement and for freeing transporters from harassment, this move can be a game changer.

 

Similarly, MSMEs with an aggregate annual turnover of up to ₹5 crore supplying goods and services exclusively to unregistered persons can furnish only one return in a year (compared to several returns by others) and pay tax quarterly. An estimated 1.7 million such tax-paying small entities will benefit from this simplification. The ecommerce platform economy and its small suppliers will benefit as they will not be required to register separately in each state where they deliver their goods and services.

 

This list can be longer. But the implications are clear. If these proposals get approved by the GST Council on Thursday, the positive impact on businesses and the economy will be no less than what the decisions of September 2025 yielded.

 

There is, however, a need to guard against complacency. Most of the proposals for the 57th meeting of the Council take away the many arbitrary powers that the bureaucracy involved in implementing and enforcing the GST has been used to exercising for many years. Such disempowerment must be accompanied by strong, unwavering support from political leadership at the state level in particular.

 

Even more important will be the streamlining of GST registration and assessment machinery. At present, companies with businesses operating in more than one state must obtain separate GST registrations and subject themselves to the jurisdiction of tax authorities in each of those states or Union Territories. Such a reform does not need to be approved by the GST Council. A good beginning would be for the Union government to give enterprises operating in more than one state the benefit of a single registration and tax jurisdiction, at least for central GST to begin with. This move alone should help over a quarter of a million tax-paying entities in the country.

 

 Once the benefits of such a reform become visible, a similar simplification could be attempted for state GST registration as well. Reform is a process. Hopefully, the 57th meeting of the GST Council will pave the way for more such reforms in the days to come, including a transition towards a completely online and faceless GST assessment system, like the one already implemented for direct taxes.