IndiaPosted at: Oct 5 2026 3:35PM


PM Modi backs next-Gen GST push for simpler compliance and greater business certainty

New Delhi, Oct 5 (UNI) Prime Minister Narendra Modi on Monday backed the government’s next phase of Goods and Services Tax (GST) reforms, saying the proposed changes would make taxation simpler and more predictable, ease compliance and improve the refund process, thereby giving businesses greater confidence to invest and expand as India pursues the goal of a “Viksit Bharat”.
Sharing a post by union Finance and Corporate Affairs Minister Nirmala Sitharaman on social media platform X, Modi said, “Next-Gen GST is making taxation simpler and more predictable while supporting businesses and households.” He said the reforms were helping expand economic activity, strengthen revenues and create more opportunities for enterprises across the country.
“The Minister elaborates that the next phase will make compliance easier and improve the refund process, giving businesses greater confidence to invest and grow. This will strengthen the foundation for a Viksit Bharat,” Modi said.
Sitharaman said the next phase would build on the GST changes already undertaken and focus on making the tax system more taxpayer-friendly. “Next-Gen GST is delivering on its twin objectives of relief for taxpayers and greater momentum for our economy,” she said.
“The next phase will focus on making compliance simpler across registration, returns, refunds, disputes and input tax credit,” the Finance Minister said, adding that a “simpler, more predictable and taxpayer-friendly GST” would enable enterprises of every size and across every region to grow and contribute to Modi’s vision of a “Viksit Bharat”.
The emphasis on process reforms comes ahead of the GST Council meeting scheduled for October 7, where the next phase of reforms is expected to be discussed. The government’s approach marks a shift from the rate rationalisation undertaken under the Next-Generation GST framework towards reducing the procedural burden associated with administering and complying with the indirect tax regime.
According to Sitharaman’s assessment of Next-Gen GST and India’s next phase of growth, the proposed reforms will cover registration, return filing, refunds, dispute resolution and the flow of input tax credit. The objective is to reduce the time and cost of compliance while making the system more predictable for businesses and taxpayers.
The government has positioned the process reforms as a complement to the rate changes that took effect from September 22, 2025. The 56th meeting of the GST Council had approved a major restructuring of GST rates and exemptions, with the government describing the exercise as a new phase of tax reform aimed at providing relief to households and improving the ease of doing business.
GST, introduced on July 1, 2017, brought a range of central and state indirect taxes under a unified framework and created a common national market. Since its introduction, the system has undergone repeated changes in rates, procedures and technology. According to a government backgrounder, the number of registered GST taxpayers increased from about 66.5 lakh in 2017 to 1.65 crore in May 2026.
The 2025 Next-Generation GST changes primarily focused on rationalising the rate structure, with the government moving towards a simpler framework centred on 5 per cent and 18 per cent rates while retaining a higher rate for specified luxury and sin goods. The reforms also included measures aimed at easing registration and return filing and expediting refunds.
The next phase is expected to focus more closely on the taxpayer’s experience after entering the GST network. Simplifying registration, reducing complexity in return filing, making refunds faster and more predictable, streamlining disputes and improving the availability and flow of input tax credit are among the issues identified for further reform.
A significant legal issue that could figure in the discussions relates to the power to arrest taxpayers during GST investigations. The GST Council’s Law Committee has examined proposals concerning decriminalisation and changes to enforcement provisions, including the possibility of removing the standalone power of arrest available under Section 69 of the Central Goods and Services Tax Act.
At present, Section 69 empowers the Commissioner to authorise the arrest of a person where there are reasons to believe that the person has committed specified offences under Section 132 of the CGST Act. The provision has been invoked in cases involving serious allegations such as fake invoicing and fraudulent availment or utilisation of input tax credit. The government, for instance, reported in April that the CGST Delhi South Commissionerate had arrested a company director in a case involving alleged fraudulent input tax credit of more than Rs 8 crore.
The proposed changes form part of a wider discussion on decriminalising cases where non-payment or short payment of tax may not necessarily involve deliberate criminal intent. Under the approach being examined, serious cases involving deliberate fraud, fake invoicing, fraudulent input tax credit or fabricated refund claims could continue to attract criminal prosecution under applicable criminal law, including the Bharatiya Nyaya Sanhita, rather than relying solely on the GST arrest mechanism.
The Law Committee, comprising officials from the Centre and the states, examines legal provisions under the GST framework and makes recommendations to the GST Council on statutory amendments and clarifications. Any substantive change in the law would, however, have to go through the prescribed legislative and statutory process.
The government’s broader objective is to combine taxpayer relief with stronger revenue mobilisation and increased economic activity. Sitharaman has maintained that a simpler tax system can reduce compliance costs, encourage formalisation and allow businesses, particularly smaller enterprises, to devote more resources to productive activity.
The government has also highlighted the expansion of the GST taxpayer base and the evolution of digital tax administration as evidence of the system’s growing reach. The next phase of reform is consequently being positioned not merely as another exercise in rate rationalisation but as an effort to make the entire taxpayer journey—from registration and filing to refunds, input tax credit and dispute resolution—more efficient.
Modi’s endorsement of Sitharaman’s assessment underlines the government’s intention to link GST reform with its wider economic agenda. The stated objective is to make taxation more predictable for households and businesses, improve the ease of doing business and provide enterprises with greater certainty as they plan investment and expansion.
With the GST Council set to consider the next set of proposals, the focus is expected to move from the structure of GST rates to the functioning of the tax administration itself. The outcome of the deliberations could determine how far the government’s promise of a simpler, faster and more predictable GST regime translates into concrete changes in registration, compliance, refunds, disputes, input tax credit and enforcement. UNI SKA AAB
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