GST 2.0: Easier Rules, More Tax Credit, Arrest Powers May Go
The GST Council is considering a new round of reforms aimed at simplifying compliance, unlocking input tax credit and reducing criminal enforcement for businesses.
India could be heading towards another major overhaul of the Goods and Services Tax system, with the focus shifting from tax rates to making compliance easier for businesses. The GST Council is considering proposals covering input tax credit, registration, refunds, returns and enforcement.
One major proposal could protect genuine buyers from losing input tax credit because a supplier fails to deposit tax. Authorities could instead pursue the defaulting supplier, using invoice-level data to trace mismatches.
Businesses may also get wider access to ITC on expenses such as employee insurance, selected vehicles, telecom towers and pipelines, although these proposals are still under consideration.
The Council is also considering changes to GST enforcement. One proposal would remove arrest powers from tax officials and require a court order for an arrest. The prosecution threshold could also be raised to Rs 5 crore, with routine interpretation disputes handled through civil penalties instead of criminal proceedings.
Other possible changes include faster GST registration, simpler returns, automated refunds and reforms to inverted-duty structures.
If approved, GST 2.0 would represent a shift from simply changing tax rates to making the system easier to navigate. For businesses, the real test will be whether fewer compliance headaches finally become more than a policy promise.
