After One Year, GST Council to Meet on Sept 12, Pg11

Key Highlights:

• The Goods and Services Tax (GST) Council is scheduled to convene on September 12 in Delhi, marking its first meeting in over a year.
• This upcoming session will be the first since the GST 2.0 rate rationalisation implemented in September of the previous year.
• A primary agenda item for discussion is the issue of blocked Input Tax Credit (ITC), particularly for goods and services affected by an inverted duty structure.
• The Council is also expected to deliberate on establishing a uniform and simplified registration framework for businesses under the GST regime.

Detailed Insights:

• The GST Council operates as a constitutional body under Article 279A(4), playing a pivotal role in India's cooperative federalism for indirect taxation.
• The GST 2.0 rate rationalisation, enacted in September 2025, streamlined the tax structure by largely adopting two main slabs: 5% for essential goods and 18% for most other items.
• Blocked ITC often arises from an inverted duty structure, where the tax rate on raw materials or inputs exceeds that on the final output, leading to unutilised tax credits.
• Section 17(5) of the CGST Act, 2017, specifically lists certain goods and services for which ITC is ineligible, contributing to the problem of blocked credits.
• The proposed simplified registration framework, a component of the broader GST 2.0 reforms, aims to expedite and automate the approval process for low-risk businesses, potentially within three working days under Rule 14A of CGST Rules, 2017.
• Addressing these issues is crucial for enhancing the ease of doing business in India and improving overall GST compliance for taxpayers.

Key Concepts Involved:

• GST Council: The apex constitutional body responsible for making recommendations on Goods and Services Tax matters to both the Union and State governments.
• Input Tax Credit (ITC): A mechanism under GST that allows businesses to deduct the tax paid on inputs from the tax payable on outputs, preventing the cascading effect of taxes.
• Inverted Duty Structure: A tax scenario where the tax rate on inputs (raw materials) is higher than the tax rate on the finished product or output.
• GST 2.0 Rate Rationalisation: A significant reform initiative undertaken in September 2025 to simplify GST slabs, primarily to 5% and 18%, aiming for greater efficiency and transparency in the tax system.