RECENT DEVELOPMENTS IN GOODS AND SERVICES TAX

President of India had expressed that India’s economy is in the pink of health and the country is well on its way to becoming a developed nation by 2047, with growth powered by calibrated reforms and ‘sagacious economic management’ by the present Government.

For the first time since 2017, GST came to national and global glare when the Prime Minister announced GST reforms from the ramparts of Red Fort on the 79th Independence Day - 15th August, 2025. The Government proposes significant reforms in GST focused on three pillars to build an Atmanirbhar Bharat’, viz structural reforms, rate rationalization and ease of living (not ease of doing business).

Key areas identified for next-generation reforms include rationalisation of tax rates to benefit all sections of society, especially the common man, women, students, middle class, and farmers. Reforms will also seek to reduce classification-related disputes, correcting inverted duty structures in specific sectors, ensuring greater rate stability, and further enhancing ease of doing business.

The GST reforms would strengthen key economic sectors, stimulate economic activity, and enable sectoral expansion. During his address, the Prime Minister underscored the importance of the next generation of reforms under GST, which will bring relief to all including MSMEs.

The intended reforms are likely to be finalized soon through GoM’s meetings and on recommendations of GST Council. It is now expected that GST Council may have to meet once or even twice in September, 2025 to ensure that the proposed reforms are implemented as ‘diwali bonus’ to citizens of the country.

In the process, revenue authorities will have to do a major rejig on GST rates including shifting of items from different tax slabs and reducing the number of slabs too. Our FM has also addressed the meeting of GoM’s set up for different purposes. The Union Finance Minister has emphasised that the proposal by the Central Government is with a vision to usher in the next generation of GST reforms in India’s journey towards becoming Atmanirbhar Bharat. With such reforms, it is also likely that Anti-profiteering rules may be back again.

The GoM on rate rationalization headed by Bihar Dy. Chief Minister who met on 21.08.2025 has cleared the proposal of a two-tier GST rate structure and shall be sending its recommendation to GST Council. It discussed the Centre’s proposal to do away with two tax slabs of 12% and 28% with other two tax slabs of 5% and 28% to continue. However, there will also be a slab @ 40% for few sin and luxury goods. GST rates on billion may continue to same. Another GoM on life and health insurance has also met and approved exempting individual insurance premium from GST.

GST reforms may lead to improved compliance and boost tax revenue in long term. Through there may be some concerns in short term in few sectors. The GST reforms in the making will also set off some impact of US Tariff and boost domestic consumption. The exporters will benefit from the tax proposals.

Owing to heavy rainfall, CBIC has extended the due date for filing Form GSTR-3B in the specified areas of State of Maharashtra.

In its first even order, GSTAT, Principal bench has asked a franchisee of Subway, Urban Essence, to deposit the profiteered amount of over Rs.5.47 lakh. The company had not passed on the reduction in GST rates to the consumers after the 18 per cent GST for restaurant services was reduced to 5 per cent from November 15, 2017.

Due date extension for 3B return for Maharashtra State

• CBIC has extended the due date to file GSTR-3B return for specified areas in the State of Maharashtra.
• There areas where extension will apply are:

• Mumbai (City) 
• Mumbai (Sub-urban)
• Thane
• Raigad and
• Palghar

• The due date for return of GSTR-3B stands extended from 20.08.2025 to 27.08.2025.

(Source: Notification No. 12/2025-Central Tax dated 20.08.2025)

GST Reforms 2.0

PM Narendera Modi during his Independence Day address on 15.08.2025 announced that Central Government is proposing significant reforms in GST focused on the following three pillars:

• Structural Reforms

• To support domestic value addition, correction of inverted duty structures to align input and output tax rates to reduce accumulated input tax credit.
• Resolve classification issues
• Provide long-term clarity on rates and policy direction.

• Rate Rationalization

• Reduction of taxes on common-man items and aspirational goods: This would enhance affordability, boost consumption.
• Reduction of slabs: Essentially move towards simple tax with 2 slabs.
• Compensation Cess: The end of compensation cess has created fiscal space, providing greater flexibility to rationalise and align tax rates within the GST framework for long-term sustainability.

• Ease of living

• Registration: seamless, technology-driven, and time-bound, especially for small businesses and startups.
• Return: Implement pre-filled returns, thus reducing manual intervention and eliminating mismatches.
• Refund: faster and automated processing of refunds for exporters and those with inverted duty structure.

The GST Council in its next meeting would deliberate on the above recommendation of Central Government. These proposed changes if implemented are expected to provide relief to common-man and boost consumption along with evolving GST into a simple, stable and transparent tax system.

(Source: PIB Release ID 2156708 dated 15.08.2025 issued by Ministry of Finance)