The upcoming GST Council meeting, expected in August 2025, could be a turning point in India's indirect tax framework. The meeting is set to discuss several key reforms aimed at simplifying the tax system, improving compliance, and supporting economic growth. Here's what to expect:
1. Rate Rationalisation and Slab Restructuring
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Current structure: 5 main rates — 0%, 5%, 12%, 18%, 28% — and two special ones (0.25%, 3%).
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Proposed change: Elimination of the 12% slab, with goods/services currently under it being shifted to either 5% or 18%. This could reduce confusion and compliance errors.
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Implication: Businesses could see either a tax increase or relief depending on where their products land; the simplification will also make tax filing easier and potentially reduce litigation.
2. Clarity on Key GST Items
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The Council may decide on:
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GST on health and term insurance premiums
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Charges by food delivery platforms
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Tax treatment of drones
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Municipal charges for additional FSI (floor space index)
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These areas have long needed clarification and are vital for both consumers and growing digital service platforms.
3. Export Status of Intermediary Services
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There’s hope that the Council will address whether intermediary services provided to foreign clients qualify as exports (hence zero-rated).
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This issue has caused tax disputes for Global Capability Centres (GCCs) and BPO firms.
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A favorable ruling could reduce tax burdens and end litigation for export-focused service providers.
4. Setting Up the GST Appellate Tribunal (GSTAT)
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Currently, the lack of a functional GSTAT means tax disputes go to High Courts, causing judicial delays.
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The Council is expected to review progress and expedite GSTAT’s implementation. This would streamline dispute resolution and lessen judicial backlog.
5. Compensation Cess and Future Planning
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The cess, meant to compensate states for GST rollout losses, was extended until March 2026 due to pandemic-related borrowings.
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A ministerial group is evaluating:
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How to use surplus cess collections
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What to do with the compensation fund post-2026
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This is key for fiscal planning and maintaining trust between Centre and states.
6. Long-Term Strategic Alignment
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These reforms are part of India’s preparation for future FTAs (Free Trade Agreements) with developed nations.
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A simplified, predictable tax regime will improve India’s global competitiveness and attract more investment.
Overall Outlook
The 56th GST Council meeting is expected to lay the groundwork for a leaner, more efficient GST system. By tackling slab complexity, dispute resolution, and sector-specific anomalies, the reforms could make GST more business-friendly and better aligned with global standards — especially as India eyes stronger trade ties and economic expansion.
