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As India moves closer to the second phase of GST reforms, the focus has clearly shifted from stabilisation to simplification and structural fine-tuning. In 2025, the GST Council continued its efforts on procedural clean-ups, stronger digital enforcement and long-pending discussions on rate rationali
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FAQ :
GST 2.0 refers to the next phase of India's Goods and Services Tax reforms, focusing on simplification, structural fine-tuning, procedural clean-ups, and stronger digital enforcement.
Key demands include meaningful progress on GST rate rationalisation, bringing petroleum products, natural gas, and alcoholic liquor under GST, and relaxing the 180-day ITC reversal rule.
Including these items under GST would enable a seamless flow of input tax credit, reduce operating costs, help stabilise prices, and ease inflationary pressures by eliminating tax cascading.
Businesses find the rule, which requires reversing Input Tax Credit (ITC) with interest if suppliers aren't paid within 180 days, overrides commercial terms and penalises genuine payment delays.
Industry experts suggest expanding refund eligibility to include input services and capital goods, not just inputs, to improve cash flow for businesses, especially MSMEs.
Businesses are seeking clear rules on the transition and utilisation of accumulated compensation cess credits, particularly after its withdrawal on motor vehicles, for carry-forward, utilisation, or refund.
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