GST2.0: Five Major Changes in Indirect Taxes | Ankit Agrawal Study IQ

Summary

The video discusses a proposed next phase of India’s GST reforms, described as “GST 2.0, Phase 3.” The speaker says the upcoming 57th GST Council meeting was scheduled for 8 October, after being delayed from 7 October. The council was expected to consider administrative and compliance changes beyond the earlier rationalization of tax rates. The subtitles do not confirm what decisions were ultimately made.

GST was introduced on 1 July 2017 to consolidate indirect taxes such as VAT, CST, entry tax, luxury tax and service tax. The speaker says a 2025 reform effort moved toward two main rates—5% and 18%—while some “demerit” goods, such as SUVs, cigarettes and tobacco, would remain subject to special rates. The stated rationale for retaining a lower rate is to avoid burdening essential goods.

Proposed Reforms and Potential Effects on Businesses

• More automated administration: Expand automated GST registration, return filing and invoice matching to reduce officer involvement and potentially lower compliance costs, delays and discretionary decisions. The speaker says 61% of new registrations were already being approved within three working days without human intervention, with a goal of raising the automated share to 80–90%.
• Input tax credit for genuine buyers: The speaker describes a problem in which a buyer may lose input tax credit (ITC) if the seller collects GST but fails to remit it to the government. A proposed change would protect genuine buyers’ credits even when an upstream seller defaults. For example, a company buying a laptop and paying ₹18,000 in GST could deduct that credit from its GST liability. If it owes ₹1 lakh, it would ordinarily pay ₹82,000, provided the credit is accepted.
• Faster exporter refunds: Exports are generally treated as zero-rated because GST is a destination- or consumption-based tax. Exporters may still have GST paid on inputs tied up while awaiting refunds. Under the proposal described, the government would acknowledge a refund application within 10 days and could release up to 90% of the eligible refund following a risk assessment. For a ₹5 lakh claim, up to ₹4.5 lakh could be released. Faster refunds could support MSME liquidity and working capital.
• Simpler GST exit and reactivation: Make cancellation easier when a business closes and automate the restoration of a suspended GST registration once outstanding tax and returns are dealt with. The stated aim is to limit disruption to business operations.
• Possible less frequent payments for small B2C businesses: The government was described as considering whether some small businesses should pay GST annually rather than monthly. Details were not specified.
• Clearer treatment of exported services: Testing, certification and repair services supplied to overseas clients were cited as activities that could be explicitly treated as exports, helping prevent disputes over whether GST applies. Examples included testing a drone prototype from Germany in an Indian laboratory, as well as IT, consulting and engineering services.

Other Possible Changes

The speaker says the council might also consider requiring court permission for arrests by GST officers and raising the threshold for criminal prosecution from ₹1 crore to ₹5 crore. These were presented as possible proposals, not confirmed outcomes.

Instruments, Sectors and Disclosures

• Investment instruments: No stocks, ETFs, bonds, commodities, cryptocurrencies or other investment instruments are discussed.
• Relevant business areas: MSMEs, exporters, manufacturing, IT, consulting, engineering and B2C businesses.
• Financial-advice disclaimer: The video contains no explicit financial-advice disclaimer. It includes a promotion for the presenter’s UPSC preparation course, not an investment product.

Presenter/source: Ankit Agrawal, StudyIQ IAS. The GST Council and government reform proposals are discussed as sources of the anticipated policy changes.