CII bats for GST 2.0: Why it matters now
The Confederation of Indian Industry (CII) has strongly pitched for a GST 2.0 overhaul — seeking simpler compliance rules and rationalised tax rates. This call comes ahead of the Union Budget 2025, as India’s indirect tax system nears the 8-year mark.
But what does “GST 2.0” really mean? And how will it impact small businesses, consultants, and Indian taxpayers? Let’s decode.
What is GST 2.0?
“GST 2.0” is not a formal law yet — it’s a conceptual upgrade being proposed by industry bodies like CII.
Key features of the proposed GST 2.0 include:
- Fewer tax slabs (merging 12% and 18%)
- Simpler GST returns
- Reduced compliance burden
- Faster input tax credit (ITC) flow
- More dispute resolution mechanisms
The aim? Reduce friction, increase tax certainty, and boost economic activity.
Why is rate rationalisation critical?
India’s current 4-tier GST rate structure (5%, 12%, 18%, 28%) often causes classification disputes.
CII suggests:
- Merging 12% and 18% into a single median slab
- Reserving 28% for only sin and luxury goods
- Reviewing inverted duty structures
Legal context:
Rate rationalisation was already discussed in the 53rd GST Council Meeting held on 22 June 2024. The Council hinted at forming a GoM to examine merger of slabs and correct anomalies.
Simpler GST compliance: What could change?
Current pain points for taxpayers:
- Monthly GSTR-1 and GSTR-3B
- Invoice matching issues
- Delays in ITC
- Complex rules for small businesses
CII’s recommendations for compliance simplification:
- Unified return for small taxpayers
- Pre-filled GSTR-3B with AI-assisted ITC reconciliation
- Remove mandatory reverse charge for certain categories
- Grievance redressal timelines under law
Expert View:
“A simplified, stable GST regime will reduce working capital blockages and encourage formalisation,” says CA Raghav Gupta, Indirect Tax Specialist.
GST 2.0: Potential impact on Indian businesses
| Area | Current GST | GST 2.0 Impact (proposed) |
|---|---|---|
| Tax slabs | 4 major rates | Likely 3 or fewer |
| Return filing | Multiple, manual steps | Pre-filled, tech-driven |
| ITC mismatches | Frequent | Automated reconciliation |
| Small business compliance | High burden | Lower with unified return |
| Classification disputes | Common | Fewer with merged rates |
Government’s stance so far
While there’s no official rollout date for GST 2.0, the Finance Ministry has:
- Acknowledged need for rate simplification
- Increased ITC automation via GSTR-2B
- Initiated reforms through GST Appellate Tribunal setup (Notified in 2025)
- Opened feedback channels through CBIC consultations
Link to official source: 53rd GST Council Recommendations – PIB
What taxpayers should do now
Until GST 2.0 is implemented, here’s how you can stay ahead:
- Use automation tools for monthly GST filing
- Keep vendor reconciliations clean and timely
- Avoid rate disputes — get expert review before classification
- Monitor updates from CBIC and GST Council regularly
FAQ on GST 2.0 (Proposed)
Q1: Is GST 2.0 a law yet?
No, it’s a policy idea supported by industry bodies like CII. The GST Council will need to approve and notify changes.
Q2: Will the number of returns reduce under GST 2.0?
Yes, if accepted, GST 2.0 may merge GSTR-1 and GSTR-3B or auto-fill them using data analytics.
Q3: When can we expect GST 2.0 to be implemented?
Possibly post-Union Budget 2025–26, depending on GST Council consensus and tech readiness.
Summary
CII has proposed a GST 2.0 overhaul to simplify compliance and merge tax slabs. If implemented, it can reduce classification disputes, ease filings, and streamline ITC claims for Indian businesses.
Final word: Let Efiletax help you navigate GST 2.0
At Efiletax, we track every GST update, Council meeting, and policy change — so you don’t have to. Whether it’s GST filing, classification advice, or ITC management, we’ve got you covered.