Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister, has recently addressed the GST 2.0 framework, emphasizing that it is primarily a process reform aimed at enhancing efficiency rather than simply maximizing revenue collection. Speaking at the Network18 Reforms Reloaded event, Sanyal highlighted the rationalization of tax slabs as a significant step towards simplifying the system and reducing unnecessary complexity.

According to Sanyal, the government had been working on this rationalization for over a year, but the timing was contingent on India's fiscal system becoming stronger following the Covid-19 pandemic. He explained that reducing and rationalizing rates would initially lead to a temporary reduction in tax collection. He noted that previous decisions to keep certain goods in higher tax brackets were primarily to avoid disruption, rather than based on any deep strategic reasoning. As an example, cement was kept in the 28% slab as it was the "least disruptive choice".

Sanyal also recalled earlier debates about tax rates, which even went into minute details such as "whether to tax salty versus caramel popcorn". He believes that the rationalized system will be much clearer, with common sense largely dictating which slab a product falls under.

Furthermore, Sanyal addressed the issue of "inspector raj" that had allegedly resurfaced in the GST registration process but stated that the framework has now been cleaned up. He stressed that while India has already implemented most major structural reforms, the need of the hour is "a thousand process reforms" to ensure smooth governance and ease of doing business.

The GST Council recently approved a new two-slab structure, eliminating the 12% and 28% brackets and lowering taxes on essential items like ghee, butter, roti, shampoo, hair oil, and toothpaste, while increasing levies on a few selected items. Finance Minister Nirmala Sitharaman announced that the new rates would be effective from September 22.

Sanyal also commented on the recent removal of the 18% GST on health and life insurance premiums, which reduces the tax to zero. While the industry expressed concerns that this could potentially lead to higher premiums due to the loss of input tax credit offsets, Sanyal dismissed these concerns. He stated that companies should focus on innovation and pass on the benefits to consumers. He urged insurers to "stop whining" and instead develop innovative products that align with the expanded demand. Sanyal made it clear that the government expects companies to pass on the GST cuts to consumers and is relying on public pressure to ensure compliance, rather than resorting to an "Inspector Raj" to enforce it. He acknowledged a minor short-term issue related to labeling and products already in supply chains but emphasized that businesses have no excuse beyond this transition.

Arunish Chawla, Secretary of DIPAM, at the Network18's Reforms Reloaded event, stated that the government is providing balanced support to the economy through GST reforms, direct tax relief, and strong public investment.