GST Council to Meet on Sept 3-4, CONSENSUS Builds Around Modi’s ‘Next-Gen’ Tax Proposal-CNBC TV18

The GST council is now scheduled to meet on September 3-4, where it is expected to give the final shape to India’s’s “Next-generation” GST reforms package.

This announsement by the finance ministry confirms a CNBC-TV18 report first published on August 15.

India’s Most AMBITUS 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 Rate Rate Ratement, CompanySATISATION COMPENSATION, and Insuration Broadly aligning with the center’s proposal for GST 2.0.

Over the last two days, gom meetings have signalled consensus among states and the center on Advanceing Prime Minister Narendra Modi’s independence day day promise of a gst 2.0 framework by diwali – A. Expected to Lower Taxes on Essential Goods and Services, Simplify Structures, and Provide Relief to MSMES and Consures.

Consensus with caveats

Officials Present at the deliberations said that while most states are in agreement with the center’s reform blueprint, Revenue Concerns Continue to Dominate to Dominate to Dominate. Several State Finance Minissed for Clear Machanisms to Offset Potential Revenue Loss from Tax Rate Reductions, Particularly in Light of Rising Expected Expenditure Pressures.

“The Political will to move forward is clear, but states want ressuance that their fiscal space won’t shrink. 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 reliefs under GST 2.0.

SBI Research Allays Fiscal Deficit Fears

A Fresh Research Note from State of India (SBI) Has Bolsred Confidence that Revenue Trade-Offs May Be Less Severe Than Feared.

Authorde 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 center’s fiscal deficit will be Minimal. “

Key Findings Include:

• The balance in the compensation cess kitty is Around ₹ 45,000 Crore. Even if states adjust ₹ 22,500 Crore from this, The Center’s Residual Burden of ₹ 22,550 Crore Delhi at Best Add Just 5 Basis Points to its fy26 FY26 Fiscal Defikit.
• An Estimated Consumption Boost of ₹ 5.5 Lakh Crore Post-GST CUT, Taxed at ~ 9.5%, Cold Generate Additional GST Revenue of Around ₹ 52,000 Crore. This would be equally shared between center and states at about ₹ 26,000 Crore Each.
• The centers have exceded Projection Tax Revenues by an average of ₹ 2.26 trillion annual over the past four years, providing a cushion for reforms.

“In the long run, there is no apparent trade-of between tax reforms and consumption, just as there is no trade-of off betterge growth and inflation,” The Note States. “GST 2.0 Block Unleash Higher Consumption, Greater Revenue, Lower Inflation, and Strongeer Growth. Debt market fears appear somear somewhat myopically overblown.”

Industry Welcomes Move, Flags Refund Concerns

Industry Associations Have Largely Hailed The Centre’s Reform Intent, Thought Some Sector Have Urged The Government to address bottlenecks that undermine compettiv

The Indian Vegetable Oil Producers’ Association (IVPA), REPRESENTING The Edible Oil Refining Sector, Welcome the Prime Minister’s Announcement of GST 2.0 but Called for URGENT REFERED DUTYD DUTYD DUTYD DUTYD Restrictions imposed in 2022.

Since Edible Oils Attract 5% GST While Key Inputs Like Packaging and Chemicals are Taxed at 12–18%, Refiners Face Substantial Unutilized Input Tax Credits (Itc). The restriction on refunds, ivpa warned, is straining working capital, discourating investment, and inflating consumer costs.

“With refunds blocked, msmes and domestic refiners face disrupted cash flows and reduced viability,” ivpa said in a memorandum to the revionue secretary. “Higher costs passed on to consumers may also push lower-income households toward unsafe or adulted oils.”

The Association Urged Parity with butter and Ghee, which continue to enjoy refund benefits. It argued that restoring itc refunds would boost industry viability, stabilise consumer prices, Reduce Import Dependence, and Promote Healthier Consumption.

What Next

With goms aligning behind the center’s proposals and the SBI Study Underscoring Fiscal Resilience, The Stage appears set for a diwali rollout of GST 2.0. However, the success of the reforms will hinge not just on rate cuts, but also on ironing out structure irritants

As one policy expert observed, “GST 2.0 will be judged not only by its ability to deliver headline tax reliablef but also by how effective it is its addresses of injustues and conferences.”

The GST council is now scheduled to meet on September 3-4, where it is expected to give the final shape to India’s’s “Next-generation” GST reforms package.