57th GST Council meeting: Six reforms that can define GST's second decade

Over the past decade, the Council has evolved into one of the most influential economic policy institutions, shaping the indirect tax framework that impacts businesses, consumers and State finances alike. Much like the Union Budget sets the broader fiscal agenda, the GST Council drives the course of indirect tax policy through its recommendations on tax rates, exemptions, input tax credit, compliance architecture and sector-specific reforms.

The 56th Council meeting, held after a gap of nearly nine months, marked the beginning of 'GST 2.0' through calibrated rate rationalisation and measures aimed at simplifying compliance. The forthcoming 57th meeting now presents an opportunity to build on that foundation by shifting the reform agenda beyond revenue considerations towards greater policy certainty, technology-driven administration and a more predictable tax environment. At a time when GST collections have consistently crossed the INR 2 lakh crore mark and the tax ecosystem has matured significantly, the next phase of reform must focus less on expanding the tax base and more on strengthening trust in the system itself.

First, the Council should prioritise reducing litigation by addressing genuine interpretational disputes, one of the closely watched expectations being the Supreme Court's decision in Gameskraft. By treating online gaming, fantasy sports and casino as betting and gambling and sustaining GST on the full-face value retrospectively from 1 July 2017, the judgement has saddled the industry with demands estimated at nearly INR 2.5 lakh crore. Although review petitions have been filed, the policy question now moves to the Council. For several years, the industry discharged GST on platform fees at 18% based on prevailing jurisprudence distinguishing games of skill from games of chance. GST law itself provides a mechanism under Section 11A of the CGST Act to regularise tax positions arising from a generally prevalent trade practice. A calibrated use of this provision could distinguish bona fide industry-wide interpretation from deliberate tax evasion. Such an approach would preserve the sanctity of the judicial decision while recognising that retrospective tax demands should not ordinarily arise where taxpayers have consistently followed an accepted interpretation of law.

Second, the Council should revisit one of the most litigated conditions governing input tax credit (ITC). The present framework links a recipient's entitlement to ITC with the supplier's deposit of tax into the Government treasury, despite the recipient having little practical ability to monitor such compliance. While safeguarding revenue is a legitimate objective, shifting the consequences of supplier default to a compliant purchaser undermines the seamless credit mechanism that forms the backbone of GST.

The technological landscape has changed dramatically since GST was introduced. Invoice-level reporting, e-invoicing, return matching, e-way bill integration and AI-enabled analytics provide tax authorities with unprecedented visibility over transactions. Rather than disturbing the recipient's credit chain, these capabilities enable recovery directly from defaulting suppliers. The Council should therefore consider introducing a legislative safe harbour whereby recipients who possess a valid tax invoice, have received goods or services, have made payment through banking channels, and have acted without collusion are protected from denial of ITC. Such a reform would significantly reduce litigation while reinforcing trust in the GST framework.

Third, the transition from compensation cess deserves a pragmatic resolution. Following the recommendation to discontinue compensation cess on specified goods from 01 February 2026, businesses have welcomed the prospect of lower future tax incidence. However, the transition must also address legitimate credits already embedded in inventories. Automobile dealers alone are estimated to be carrying compensation cess credits of nearly INR 2,500 crore, with similar concerns extending to sectors such as coal and aerated beverages. The Council is expected to bring a coherent conclusion to the reform by prescribing a time-bound window for migration of eligible balances into the GST credit ledger. Such a measure would not merely settle a technical issue but would unlock working capital, strengthen dealer liquidity and ensure that tax reform does not leave genuine credits stranded.

Fourth, the time has come to revive the conversation on bringing petroleum products within the GST framework through a calibrated roadmap. Petrol, diesel, aviation turbine fuel and natural gas continue to remain outside GST, resulting in embedded taxes that cascade through manufacturing, logistics and transportation costs. Recent volatility in global crude oil prices has once again highlighted the limitations of maintaining parallel indirect tax regimes. While the fiscal dependence of States on petroleum revenues necessitates a gradual approach, even a phased inclusion of selected products such as aviation turbine fuel or natural gas would improve credit flow, reduce cascading and further the objective of creating a seamless national market.

Fifth, the Council has an opportunity to provide long-awaited certainty to the rapidly evolving digital economy. The application of Section 9(5) of the CGST Act to app-based passenger transportation has generated considerable uncertainty as platform business models continue to evolve. Subscription-based models, where drivers pay a fixed platform access fee while independently determining, collecting and retaining fares, differ fundamentally from conventional aggregator models. Divergent advance rulings have created uncertainty by placing varying emphasis on factors such as fare determination, driver onboarding, trip monitoring and payment collection. The 57th Council meeting is therefore expected to lay down a clear functional test based on the platform's actual degree of control and involvement, while also resolving whether such operators require registration in every State where drivers operate or may comply through a centralised framework.

Finally, the next phase of GST reform must be driven by technology-enabled administration rather than additional compliance obligations. Businesses operating across multiple States continue to face parallel audits, duplicate investigations and inconsistent interpretations despite functioning under a common PAN. A centralised administrative framework for multi-State taxpayers would significantly reduce compliance costs while improving consistency in assessments and adjudication.

Similarly, expanding faceless GST administration beyond refunds to selected assessments and registrations can enhance transparency, minimise subjectivity and promote uniformity in decision-making. The increasing use of AI by GSTN also provides an opportunity to move from broad-based scrutiny towards intelligence-led enforcement, enabling authorities to focus on high-risk transactions while reducing compliance burden for the vast majority of honest taxpayers.

The 57th GST Council meeting, therefore, presents an opportunity to reaffirm the principles on which GST was originally conceived, i.e., simplicity, neutrality, and seamless flow of credit. If the first decade of GST was about creating a unified indirect tax framework, the second must be about creating confidence in that framework. The true legacy of the Council's next meeting will therefore not lie in the number of recommendations it makes, but in whether it lays the foundation for a tax regime that is simpler, more predictable and better aligned with long-term growth aspirations.

Shilpa Verma, Associate Director, Grant Thornton Bharat and Ajay Jha, Assistant Manager, Grant Thornton Bharat have also contributed to this article.

This article first appeared in the Taxmann on 4 August 2026.

Learn more about how our Tax, Regulatory & Finance Consulting services can help you

Learn more