GST Process Reforms May Take A Year To Stabilise From April 2027: FM

The next phase of Goods and Services Tax (GST) reforms could take about a year to stabilise after the new process changes take effect from April 1, 2027, Finance Minister Nirmala Sitharaman said after the 57th GST Council meeting.

The reforms announced at the meeting focus on GST processes and compliance rather than a broad restructuring of tax rates. They cover areas such as registration, refunds, notices, enforcement and input tax credit.

Sitharaman expects the new framework to settle over the year after implementation, as businesses, taxpayers and state tax authorities adjust to the revised procedures.

New GST Rules To Focus On Compliance

The next phase of GST reforms will focus on how taxpayers interact with the tax system. The Council has approved changes intended to simplify some compliance procedures and reduce the burden of handling smaller cases.

The reforms are scheduled to take effect from April 1, 2027. Their implementation will therefore take place well after the GST rate restructuring introduced in September 2025.

The Council has also worked on issues linked to input tax credit and inverted duty structures. Input tax credit allows a business to set off eligible GST paid on purchases against its tax liability. An inverted duty structure occurs when the GST rate on inputs is higher than the rate on the final product.

GST Revenue Has Not Fallen

Sitharaman said the reduction in GST rates introduced last year had not resulted in a revenue loss for the government. GST collections have grown, with revenue also becoming less dependent on festival months.

GST revenue is divided between the Centre and states, making collection trends relevant to both levels of government. The government expects the process changes planned for 2027 to provide greater certainty for taxpayers while maintaining revenue flows.

What Changed In GST Rates

The process reforms follow the GST rate restructuring that came into effect on September 22, 2025. Around 375 products, including toothpaste, shampoo, televisions and cars, were covered by the changes.

The earlier 5 per cent, 12 per cent, 18 per cent and 28 per cent structure was reorganised, with many products moving into the 5 per cent or 18 per cent categories.

The government has also maintained that 99 per cent of commonly used daily-use items now fall under the 5 per cent GST rate. For consumers, the actual reduction in the final price depends on how the tax change is passed on by businesses.

Other Key Decisions From The GST Council

The Council also approved changes covering GST registration, refunds and enforcement. Small businesses selling through e-commerce platforms will get simpler registration requirements.

The acknowledgement period for refund applications will be reduced from 15 days to 10 days, along with greater automation in refund processing.

On input tax credit, the Council referred the issue of genuine businesses losing credit because of supplier non-compliance to a committee for further examination. The Council also approved tighter conditions for inspections of goods in transit.