GOODS AND SERVICES Tax (GST), introduced in 2017, underwent its most comprehensive overhaul this September, with the GST Council announcing sweeping changes to the tax framework.
The revamp introduced a largely two-rate system of 5 per cent and 18 per cent, along with a special 40 per cent levy on certain luxury and sin goods. Numerous essential items were fully exempted. The earlier 12 per cent and 28 per cent slabs were removed, and the compensation cess—imposed to offset states’ revenue losses following the shift from value-added taxes to GST—was also discontinued.
While the primary aim of the overhaul was to stimulate consumption and provide relief to ordinary people, the reforms also emphasised ease of doing business, especially for small traders and entrepreneurs. Businesses stand to gain not only from increased consumer demand driven by lower prices but also from simplified compliance. The Council also sought to address persistent challenges such as the inverted duty structure, where the tax on raw materials exceeded that on finished products.
To explain these developments, THE WEEK organised a GST outreach event on November 22 in Chennai. The programme was supported by ARS Steel as associate sponsor. A team of officials from the GST and Customs departments, led by S. Nasser Khan, IRS, commissioner, customs and GST, gave detailed presentations on the changes, their benefits for traders and businesses, common compliance mistakes and how audits can be avoided through proper filings.
“It has been a very structural reform in terms of reducing the number of slabs, towards simplification. Moving goods from 5 per cent, 12 per cent, 18 per cent or 28 per cent to zero rate has been a major initiative. In total, 66 items had moved to the exempt category,” Khan noted.
Calling it a major opportunity for industry, Khan urged businesses to study the revised rates to explore diversification, new product portfolios and fresh consumer segments.
Khan also highlighted measures aimed at easing compliance for small businesses. “A small taxpayer issuing B2B invoices with a taxable value of up to Rs2.5 lakh a month will receive automatic registration within three days of applying,” he said.
Further proposals aim to ease compliance for businesses operating solely through e-commerce platforms. Presently, operating in multiple states requires registration and physical offices everywhere. The government has proposed a simplified registration process to eliminate this logistical burden.
S. Sridhar, assistant commissioner, CGST, and R. Nallasivam, superintendent, CGST, made a presentation on due diligence in GST compliance, outlining a five-point audit mandate: correct declaration of value, accurate tax payment, proper filing and claiming of refunds, legitimate input tax credit (ITC) and adherence to compliance procedures.
CGST superintendents Ravindra Kumar, Dipu Mahato and Prabhat Ranjan explained how to reduce audit observations, emphasising the common issue of ITC mismatches between GSTR-2B and GSTR-3B. They also clarified filing requirements for goods sent for job work.
Officials engaged with traders, small business owners, industry association members and students, addressing queries and clarifying doubts.