The next meeting will take up issues arising with regards to inverted duty structure (IDS) of different sectors, officials say.
The next GST Council meeting is likely to further the progress made on “process reforms” – undertaken in the previous meeting – to ease compliance costs for businesses, relax registration processes, reduce litigation, and fix inverted duty structure issues, according to government sources.
“The key issue of simplifying the slab structure is done. Now, we have to focus on process reforms,” said a senior official. The next Council meeting is expected in late July or August.
In the previous meeting held in September 2025, the Council approved a simplified GST registration scheme for small and low-risk businesses, intended at providing benefit to 96 percent new registrants.
The Council also approved a simplified registration scheme for small suppliers supplying through electronic commerce operators. “In the next meeting, the framework of the scheme will be presented in detail to the Council, for approval,” another official told Moneycontrol.”
The next meeting will take up issues arising with regards to inverted duty structure (IDS) of different sectors,” said the first official. Industries such as pharmaceuticals, textiles, footwear, food processing, paper, and electric vehicles are witnessing significant credit build-ups as taxes paid on raw materials, services, logistics, technology, and capital investments frequently exceed the GST payable on their outputs.
An Inverted Duty Structure (IDS) occurs when the tax rate on inward supplies (inputs) is higher than the tax rate on outward supplies (final outputs). It means a business pays more GST when buying raw materials or services than it collects from customers when selling the finished product. And as a result, businesses are unable to claim the accumulated input tax credit – as the credit accumulated through output tax is lower than tax paid on inputs.
The last Council meeting approved a system-driven 90 percent provisional refund mechanism specifically for inverted duty structure claims. This was done to provide liquidity relief to affected industries, and eliminate the prolonged cash-crunch cycles that plagued domestic manufacturers.
“At a time when India is seeking to strengthen domestic manufacturing, attract investments, and improve global competitiveness, the continued blockage of legitimate tax credits effectively converts GST from a consumption tax into a cost. This undermines the core design principle of GST as a seamless value-added tax,” said Nitin Vijaivergia, Partner, Price Waterhouse & Co LLP.
Key focus areas for the next meeting –
The upcoming GST Council meeting presents an important opportunity to further the process-reform agenda under GST, say experts. While digitization has significantly improved tax administration, businesses continue to face compliance complexities, procedural challenges, and frequent system-driven changes.
“It is expected that the Council will focus on simplifying compliance, reducing litigation, streamlining refunds, and providing adequate implementation time for new requirements. There is also an expectation that key digital initiatives such as the Invoice Management System (IMS) and greater synchronization between GST returns and e-way bill data will form part of the reform agenda, helping reduce reconciliation challenges and compliance burdens,” said Rajat Mohan, Managing Partner, AMRG Global.
Ikesh Nagpal, Lead-Indirect Tax, AKM Global, said, “Refunds and disputes must run on rails. Reform of the appellate tribunal and streamlining of faster refunds in a time-bound manner with greater standardisation of notices and wider use of technology can significantly reduce litigation and improve taxpayer trust.”
Nagpal also said the Council should operationalise Section 11A of CGST Act in a transparent and objective manner to address legacy interpretational disputes.
“The recent discussions around retrospective tax demands in sectors such as online gaming, including the Gameskraft matter, highlight the need for a structured mechanism to address situations in which an industry has followed a widely accepted tax position over a prolonged period,” he added.
Section 11A of the CGST Act gives the central government, on the recommendation of the GST Council, the power to waive off past GST liabilities of the industry for a particular period if it is satisfied that the non-payment or under-payment of taxes was due to a “generally prevalent trade practice”. The clause was introduced through the Finance Act, 2024, following representations from the online gaming industry seeking relief from retrospective tax demands.
On inverted duty, Vijaivergia said a pragmatic policy response for India would include: eliminating inverted duty structures through targeted rate rationalisation, particularly in sectors where manufacturing and investment are strategic priorities, and allowing annual refund of residual unutilised credits, so that legitimate tax credits do not remain perpetually locked in the system.
Source: money control
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