Paper: GS – III, Subject: Economy, Topic: Taxation, Issue: GST 2.0 – A Foundational Reform.
Context:
56th GST Council meeting approved reforms which reflect a pro-growth and pro-business approach. It aims at greater economic expansion, tax compliance, and investor confidence.
Key Highlights:
GST:
- Goods and Services Tax (GST) introduced in 2017 as a symbol of cooperative federalism.
- It replaced fragmented tax system with a unified indirect tax framework.
Achievements of GST So Far (2017–2024):
From Complexity to Clarity:
- Streamlined indirect taxes.
- Dismantled inter-state barriers.
- Reduced cascading effect of taxes on inputs.
Economic Impact:
- Enhanced efficiency.
- Boosted investor confidence.
- Simplified compliance for businesses.
Challenges Faced:
Key Features of GST 2.0 Reforms:
Broader Structural Impact:
- Investor Confidence: Lower litigation costs, higher predictability.
- Ease of Doing Business: Improves capital planning, boosts growth.
- Formalisation of Economy: Wider tax base, reduced evasion.
- Future Scope:
- Cross-utilisation of central GST.
- Tradable Input Tax Credit (ITC) scrips.
- Inclusion of products like aviation fuel, natural gas under GST.
Conclusion:
GST 2.0 is a move towards simplified, dispute-free, and fully integrated GST system. It strengthens India’s competitiveness globally. GST 2.0 represents a foundational reform, not just a tax measure.
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