The Unfinished Business of GST 2.0: EoDB

When the Goods and Services Tax Council unveiled what is being called GST 2.0, the political moment was unmistakable. After years of debate, India now has a simpler structure: two principal slabs of 5% and 18%, with a very high rate for sin and luxury goods. 

For example, health and life insurance have been exempted, and the Council has promised faster refunds, easier registration, and the long-awaited operationalisation of the appellate tribunal. For households and consumers, the relief is expected to be visible. White goods, many vehicles and a swathe of daily-use products will get cheaper, and insurance will feel less like a penalty on prudence. In the language of media headlines, this is simplification.

Yet if the yardstick is ease of doing business, GST 2.0 is a missed opportunity. It fixes the optics of the tax map, but not the experience of navigating it. Businesses had hoped for an overhaul of the compliance architecture that still drains their time and working capital. Instead, what they have received are incremental tweaks.

The revised GST regime will come into force on September 22, timed deliberately with the onset of India’s festive season. These are the weeks when households traditionally commit to large purchases, from appliances to automobiles, and in many cases, even new homes. The announcement by Prime Minister Narendra Modi in his Independence Day speech that a rationalised scale would follow soon had already created an air of expectation, with many families holding back discretionary spending. The Council has thus aligned GST reform with sentiment, ensuring that the benefits are felt not in abstract spreadsheets but in crowded markets and retail shelves.

FMCG companies have long lamented that urban demand was subdued under the weight of high inflation. Lower GST rates now promise to lift that burden, cutting prices and releasing household budgets for wider consumption. The relief will be particularly visible in white goods and packaged products, where a marginal reduction in price can trigger a surge in demand.

At the same time, exporters gain partial respite. With inputs attracting lower GST, their cost structures will ease somewhat, softening, though not erasing the tariff disadvantage created by hostile trade winds abroad.

What is less noticed, though no less important, is the interplay of these changes with parallel laws such as the Legal Metrology Act and the Drug Price Control Order. Every revision in tax liability requires manufacturers and packers to revise retail prices on pre-packaged goods, notify dealers, and publish at least two public notices in newspapers. For firms, especially in consumer goods, this exercise is not a minor compliance step but a logistical scramble at scale, and at a cost. Rate cuts may generate cheer, but their implementation demands far tighter coordination across regulatory regimes if the promise of simplicity is to be delivered in practice.

And for the ordinary consumer, the change may carry a small but welcome psychological dividend. For years, many purchases carried the faint irritation of an unseen guest at the table — the 28% tax silently swelling the bill. With the new structure, that guest has finally left, or at least agreed to pay for their share of the meal.

The rate structure may now look elegant on paper, but the daily life of a firm is defined by processes, not principles. Refunds are often held up, reconciliations are endless, and system changes come with little warning. The Council has announced quicker registration for non-risky applicants, a seven-day refund target for exporters, and provisional refunds from November. These are welcome gestures, but they will remain administrative patches, until they are proven otherwise. 

A true ease-of-doing-business approach would have embedded statutory time limits for refunds with automatic payment of interest, published dashboards on refund and appeal timelines, and eliminated duplicative reconciliations that keep businesses in a perpetual sprint.

An honest conversation on ease of doing business must begin with the mindset of administration. GST, in philosophy, still treats every taxpayer as a suspect, enforcing invoice-level policing, multiple reconciliations, and a maze of notices. The majority of firms comply in good faith, yet they are burdened with the same scrutiny as habitual evaders. An EoDB 2.0 vision would reverse this logic: use data analytics to target the risky minority, while granting consistent taxpayers the relief of fewer filings, quarterly returns, and faster refunds. Compliance cannot be designed around mistrust; it must be built on predictability and trust if it is to truly unlock investment and enterprise.

Predictability itself is the currency businesses value most, yet it remains scarce under GST. Frequent notifications, mid-year rate changes, and contradictory state-level rulings create planning uncertainty that saps confidence. A firm recalibrating its systems every quarter is a firm that is not investing its energy into growth. An EoDB-first approach would establish clear principles: rate changes only at quarter-ends, exemptions with advance notice. Without stability of rules, simplification on paper quickly devolves into complexity on the ground.

Technology, too, has been a double-edged sword. India digitised compliance at scale, but often in ways that replicate bureaucracy on a screen rather than remove it. Pre-filled returns, real-time refund dashboards, and faceless adjudication could transform the experience, yet these remain promises rather than practice. Other jurisdictions show what is possible: the EU guarantees refunds within fixed days, Singapore uses risk-based filing relief, and the UK allows simplified quarterly filing for small taxpayers. India’s GST is still spoken of, in anecdotal evidence from sectors and states, as a system where local-level harassment, rent-seeking, and even outright extortion persist. This is the sharpest indictment of design: when a reform celebrated as digital and faceless continues to produce old-style nightmares at the ground level.

The transition burden is another under-appreciated cost. The new rates come into force in the middle of September. That means every MSME will spend the busiest season of the year rewriting price catalogues, updating contracts, and reconfiguring software. In some cases, supplies that are now taxable will suddenly become exempt, triggering input credit reversals and paperwork in the middle of the festive ramp-up. A reform that was supposed to simplify has in fact introduced complexity into the transition. An EoDB-conscious Council would have timed changes for quarter-ends and offered standardised migration kits through the GST Network to make implementation predictable.

On disputes, there is progress. The GST Appellate Tribunal will finally begin work, with filings opening later this month and hearings expected before the year ends. This is a structural advance, yet it solves only the back-end of litigation. The bigger design question is whether compliance should remain form-heavy and reconciliation-first. Pre-filled returns and faster registration will help at the margins. But the system still relies on invoice-level policing and repeated reconciliations between GSTR-1, GSTR-3B, e-invoices and e-way bills. For many firms, this creates permanent anxiety about input credit mismatches and cash flow blockages.

It is true that rate cuts will have macroeconomic effects. Early estimates suggest the changes could bring inflation down by about a percentage point, and the revenue hit may be manageable. Those are useful tailwinds for the economy. The Council deserves credit for achieving consensus across states and delivering a cleaner rate structure. But policy is not only about what is won in the room. It is also about what is lost in translation to the shop floor and the factory ledger. GST 2.0 is expected to deliver ease of living. The harder task of ease of doing business remains unfinished.