Impacts and extent of proposed Goods and Services Tax (GST) update

In a significant move towards tax reform, the Indian government has fast-tracked the implementation of GST 2.0, also known as the big-bang reform, which was announced by the Prime Minister from the ramparts of the Red Fort on August 15. The GST Council, in a meeting held on September 3, approved the new rates, which will come into effect from September 22.

Among the changes, most specific job work services are shifting from a 12% tax rate to 5%, offering a relief to many industries. However, the new rates for admission to Indian Premier League (IPL) matches will see a rise, with fans having to pay 40% GST, a rate similar to that for betting, casinos, gambling, horse racing, lottery, and online gaming. This could potentially impact the popularity of the IPL, given the recent loss of main sponsors following the ban on online gaming.

The changes have been made in the tax rates for about 440 items. Input tax credit will be permitted for most goods and services, unless specifically restricted. This means that businesses can claim tax paid on their purchases as a credit against their output tax liability.

The Goods and Services Tax Appellate Tribunal (GSTAT) is expected to become operational for accepting appeals by the end of September 2025, with hearings starting by the end of December 2025. The GSTAT, which will serve as the National Appellate Authority for Advance Ruling, is expected to receive a large number of cases until June 2026, as most orders currently favor the Revenue.

Concerns have been raised about the ideal GST system due to restrictions on input tax credits and refunds, and the revenue-driven nature of most assessing officers. There are also uncertainties about whether we will achieve an ideal GST system.

The membership of the GST Appellate Court, which began operating at the end of September 2025, includes judges appointed by the governing body overseeing GST matters. However, specific names are not publicly available as of now.

By September 30, 2025, about 58% of the changes are in the 12-5% tax rate category, 12% are in the 18-5% category, 9% are in the 12-0% category, and 7% are in the 28-18% category.

The Government's push towards GST rate rationalization aims to simplify the tax structure and reduce compliance costs for businesses. However, the success of this reform will depend on various factors, including the effectiveness of the GSTAT and the implementation of the new rates.

This article was published on September 5, 2025, by a chartered accountant, providing insights into the latest developments in the Indian tax landscape. The writer aims to provide clear, straightforward, and approachable information to help readers understand the impact of these changes on their businesses and personal finances.