Page 60 - Mann Ki Baat English

The introduction of GST in July 2017 was
aimed at unifying taxes into a single system.
It replaced the complex system of multiple
central and state taxes, including excise duty,
service tax, VAT, additional surcharges, and
cess, among others. It aimed to reduce the
cascading effect, simplifying compliance and
improving transparency. In this article, we will
examine how GST 2.0 post September 2025
rationalisation of tax slabs, logical allocation
of items to tax slabs and process reforms
introduced will unlock permanent efficiency
gains beyond the immediate price effects and
demand stimulus.
Let us have a look at what GST 2.0 is trying
to fix. The first iteration of GST focused on
minimising disruptions during the transition
Sanjeev Sanyal to the new indirect taxation regime and
Member, Economic maintaining revenue stability through rate
Advisory Council to the settings that matched pre-existing tax levels.
Prime Minister
The tax rate structure consisted of four main
bands (5 per cent, 12 per cent, 18 per cent, 28
GST 2.0 per cent) and special rates and exemptions. As
the aim was to facilitate an easy transition to a
new system at a national level, it didn’t follow
Unlocking a first-principles approach, such as achieving
allocative and process efficiency. Products
Efficiency were mapped to tax slabs based on their
pre-GST effective tax rates rather than their
Gains economic characteristics, creating a taxonomy
that taxed salted or plain popcorn at 5 per
beyond cent, while caramelised or flavoured varieties
fell under the 18 per cent slab. While there have
Price been continuous reforms over the past eight
years to optimise the system, inconsistent tax
Effects rates between similar products have led to
classification disputes, resulting in more than
10,000 advance ruling applications per year by
2024.
The September 2025 GST reforms are a
restructuring of India's indirect tax architecture,
moving from a framework designed to
minimise disruptions to one based on

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