FM to Meet India Inc Today on GST 2.0 Reforms, Tax Simplification Drive

Finance Minister Nirmala Sitharaman is scheduled to hold high-level discussions with representatives of India Inc on May 27 as part of the Centre’s renewed thrust to implement the long-awaited GST 2.0 reforms. The strategic meeting, confirmed by senior government sources, will focus on overhauling the current Goods and Services Tax (GST) framework to simplify compliance, rationalise tax rates, and address long-standing issues around classification and litigation.

Highlights:

• FM Sitharaman to meet India Inc today to discuss GST 2.0 reforms.

• Industry leaders to present proposals for tax rationalisation and compliance ease.

• Key focus: phasing out 12% slab and simplifying to three-rate system (5%, 18%, 28%).

Top Government Officials and Industry Leaders in Attendance

The meeting, which is set to play a pivotal role in shaping the GST 2.0 roadmap, will also be attended by top officials from the Finance Ministry, Ministry of Corporate Affairs, and Chief Economic Adviser V Anantha Nageswaran. Industry leaders are expected to present specific recommendations and feedback to help the Centre chart a more business-friendly path for GST reforms. This stakeholder consultation is being viewed as an essential step toward building consensus with states before proposing any structural changes through the GST Council.

Highlights:

• Government officials including the Chief Economic Adviser to participate in the meeting.

• Discussions intended to facilitate a uniform reform roadmap in coordination with states.

• Focus areas include compliance, rate simplification, and classification disputes.

Rationalising GST Structure: Shift from Four-Tier to Three-Tier Regime

At the heart of the GST 2.0 proposal is a major rationalisation of the current rate structure. The government is actively considering the removal of the 12% tax slab to transition to a simplified three-rate system consisting of 5%, 18%, and 28%. According to officials, this structural change would not only ease the burden of classification and litigation but also stimulate consumption and improve revenue buoyancy by enhancing compliance levels.

Highlights:

• Proposal to eliminate 12% slab to move to a three-tier GST system.

• Aimed at reducing litigation and classification disputes while improving transparency.

• Simplified structure expected to enhance consumption and ease-of-doing-business.

Food Classification and Litigation Risks: Key Priority Areas in GST 2.0

Classification of food items remains one of the thorniest issues in the existing GST framework. Multiple tax slabs for similar categories of food have frequently led to confusion and litigation. Officials said that GST 2.0 will place greater emphasis on resolving these classification ambiguities to streamline tax treatment across states. Clarity in this domain is expected to curb revenue leakages and bring predictability for businesses operating in the FMCG, agriculture, and hospitality sectors.

Highlights:

• Classification issues for food products a central concern in the reform dialogue.

• Government aims to bring uniformity and reduce disputes over tax rates.

• Misclassification and multiple tax slabs have historically led to revenue leakage.

India Inc’s Input Critical in Framing Future Roadmap

The business community’s insights are expected to significantly shape the trajectory of the reforms. Industry associations and large corporates will present proposals targeting the elimination of compliance bottlenecks, clarity on input tax credit norms, and smoother refund mechanisms. The Centre is also exploring feedback on possible thresholds for small enterprises and turnover-based simplification norms to benefit MSMEs.

Highlights:

• Corporates to provide structured feedback on compliance simplification and tax clarity.

• Input tax credit norms, refund delays, and compliance costs among key concerns.

• MSME participation critical in shaping turnover-based relief mechanisms.

GST Council May Consider Framework Post-Consultation

Following today’s meeting, the government is expected to consolidate feedback and discuss potential amendments within the GST Council in the coming weeks. Officials reiterated that while the Group of Ministers (GoM) on rate rationalisation has already implemented marginal changes, GST 2.0 aims to deliver a more holistic transformation, aligned with the Centre’s broader objective of simplifying India’s tax regime and boosting formal sector growth.

Highlights:

• Post-consultation, Centre expected to present proposals in the upcoming GST Council meeting.

• GST 2.0 to shift from piecemeal reform to a fundamental structural overhaul.

• Focus on enhancing efficiency, reducing litigation, and supporting formalisation.

Finance Minister Meets India Inc for GST 2.0 Reform Talks

Policy Development Overview:
Finance Minister Nirmala Sitharaman is scheduled to meet key industry leaders on May 27 to discuss the next phase of GST 2.0 reforms, signaling a renewed push by the Centre to overhaul the indirect tax regime. The government aims to simplify the GST structure by moving to a three-rate system and addressing long-standing classification and compliance issues.

Reform Focus Areas:

• GST Rate Rationalisation: Shift from four slabs (5%, 12%, 18%, 28%) to a simplified three-slab structure (5%, 18%, 28%) to enhance ease of compliance.

• Tax Clarity: Resolve disputes around classification, particularly for food items, to reduce litigation and revenue leakages.

• Boosting Consumption: Economists support reform, citing indirect tax changes as a stronger driver of consumer demand compared to income tax tweaks.

• Industry Consultation: India Inc will present recommendations, helping shape a consensus-based roadmap for implementation in coordination with states.

Impact on Stock Market & Investors:

• Positive Sentiment Trigger: Investors may view the simplification effort as pro-growth, especially for consumption-driven sectors like FMCG, retail, and food services.

• Improved Earnings Outlook: Reduced compliance burden and litigation may benefit listed companies across manufacturing and services.

• Tax Clarity Benefits: Sectors facing classification-related tax disputes may rally on expectations of regulatory clarity.

• Short-Term Gains Possible: Anticipation of reforms may drive short-term market optimism, especially in small- and mid-cap consumer-facing stocks.

Highlights:

• FM meets India Inc to discuss GST 2.0

• Centre proposes simplifying to 3-rate GST structure

• Focus on tax clarity, especially for food items

• Investors eye benefits for consumption sectors and improved tax compliance climate