GST Council to meet on Sept 3-4, consensus builds around Modi’s 'next-gen' tax proposal
The GST Council is now scheduled to meet on September 3-4, where it is expected to give the final shape to India’s “next-generation” GST reforms package.
This announcement by the Finance Ministry confirms a CNBC-TV18 report first published on August 15.
India’s most ambitious indirect tax overhaul since the 2017 rollout of Goods and Services Tax (GST) is inching closer to reality, with groups of ministers (GoMs) on rate rationalisation, compensation cess, and insurance broadly aligning with the Centre’s proposal for GST 2.0.
Over the last two days, GoM meetings have signalled consensus among states and the Centre on advancing Prime Minister Narendra Modi’s Independence Day promise of a GST 2.0 framework by Diwali—a package expected to lower taxes on essential goods and services, simplify structures, and provide relief to MSMEs and consumers.
Consensus With Caveats
Officials present at the deliberations said that while most states are in agreement with the Centre’s reform blueprint, revenue concerns continue to dominate discussions. Several state finance ministers pressed for clear mechanisms to offset potential revenue loss from tax rate reductions, particularly in light of rising expenditure pressures.
“The political will to move forward is clear, but states want reassurance that their fiscal space won’t shrink. Compensation cess reserves and buoyancy from higher consumption are being actively examined as cushions,” a senior official told CNBC-TV18.
The compensation cess fund, originally designed to backstop states after the GST transition, has emerged as the anchor for managing revenue risks under GST 2.0.
SBI Research Allays Fiscal Deficit Fears
A fresh research note from State Bank of India (SBI) has bolstered confidence that revenue trade-offs may be less severe than feared.
Authored by Soumya Kanti Ghosh, Member of the 16th Finance Commission and Group Chief Economic Advisor, SBI’s report argues that the net impact on the Centre’s fiscal deficit will be “non-existent or minimal.”
