NEW DELHI: With Goods and Services Tax (GST) process reforms announced on Thursday, completing the GST 2.0 reform agenda, revenue growth is expected to increasingly bank on an expanding tax base and improved compliance rather than tax rates, a senior official said on Monday.
“The focus should be on expanding the base and improving its quality,” the official said, stressing the need to bring more businesses into the formal tax system and improve transaction disclosures by existing taxpayers.
Following the GST rate cuts and slab rationalisation in September 2025, taxable supply rose 25.8% year-on-year between October 2025 and July 2026, while business-to-consumer (B2C) supply increased 26.7%.
Gross tax liability grew 13.6% during the period, even as the effective tax rate on domestic taxable supply declined from 14.55% to 13.13%, indicating an expansion of the tax base following rate rationalisation.
“Consumption has held up, and the base has widened while revenue has stabilised after the rate restructuring in September 2025,” a senior official said, adding that the feared revenue shock had not materialised.
Simpler procedures and a rationalised rate structure are expected to further support compliance and revenue mobilisation.
The GST Council last Thursday approved a raft of process and systems reforms aimed at bringing India’s indirect tax regime closer to global practices by simplifying compliance, accelerating the flow of legitimate tax credits and reducing the scope for litigation. The reforms are expected to align the government’s objectives more closely with the interests of businesses and consumers by improving revenue productivity, lowering business costs, enhancing competitiveness and potentially reducing consumer prices.
The GST Network (GSTN), the technology backbone of the indirect tax regime, is expected to roll out new systems soon to support implementation of the reforms, the official said.
Emphasising the importance of effective implementation, the official said GSTN had been involved in preparing the reform agenda and understood the requirements. The platform will need to remain agile, respond to evolving needs and ensure that new systems are properly vetted. Implementation will also be monitored, with industry stakeholders encouraged to flag specific operational issues for timely resolution.
Separately, the GST Council will replace its existing officers’ committees with a single, permanent 12-member Standing Committee to examine proposals and address issues relating to the indirect tax regime.
The committee will comprise five representatives from large states, four from medium-sized states and three from smaller states. Representation will be determined by GST revenue, taxpayer numbers and geographical spread. Membership will rotate every two years, although the five positions allocated to large states will remain permanent.
Source: The Financial Express
