GST reform in India The Great GST Reset 2025: Simplifying Tax Slabs, Compliance, and India’s Economic Future

The Great GST Reset 2025: Simplifying Tax Slabs, Compliance, and India’s Economic Future

The Great GST Reset: A New Era for India’s Taxation System

Introduction

India’s Goods and Services Tax (GST), launched on 1st July 2017, was hailed as the country’s biggest tax reform since independence. The primary aim was to create “One Nation, One Tax, One Market”, simplifying the indirect tax structure and eliminating the cascading effect of multiple state and central taxes.

However, like every large-scale reform, GST has undergone constant evolution. The government, policymakers, and businesses have all faced challenges in its implementation. From issues of compliance, classification disputes, IT glitches, to rate rationalizations, GST has been a journey of continuous learning.

Now, in 2025, conversations around the “Great GST Reset” are gaining momentum. The government is focusing on simplifying tax slabs, improving compliance, reducing litigation, and making GST more taxpayer-friendly. This reset is not just a reform—it is an opportunity to redesign GST into a globally competitive, growth-driven taxation system.

In this article, we will dive deep into what the “Great GST Reset” means, its challenges, opportunities, and how it could shape India’s future economy.

The Need for a GST Reset

While GST has brought many benefits, including a unified tax system, improved transparency, and better revenue tracking, certain structural flaws remain:

   Complex Tax Slabs

    India currently has multiple GST slabs (0%, 5%, 12%, 18%, and 28%) with several exceptions and cess categories.

    This creates confusion, classification disputes, and frequent litigation.

    Countries with GST/VAT typically operate with fewer slabs, making taxation simpler.

2.      High Compliance Burden

    Small and medium enterprises (SMEs) face heavy compliance requirements, including monthly, quarterly, and annual filings.

    Frequent changes in GST return formats and IT glitches have added to their challenges.

3.      Revenue Imbalance

    States often express concerns about revenue shortfalls and compensation delays.

    The COVID-19 pandemic worsened fiscal stress, increasing dependence on GST revenues.

4.      Litigation and Disputes

   Ambiguities in classification of goods/services (e.g., food items, software, construction) have led to multiple disputes in courts.

    A simpler rate structure and clearer definitions could reduce litigation.

5.      Inverted Duty Structure

    Some industries face higher GST on inputs compared to outputs, leading to accumulation of input tax credit and blocked working capital.

These challenges highlight the urgent need for a comprehensive GST reset not just piecemeal changes.

What is the “Great GST Reset”?

The Great GST Reset refers to the government’s move towards:

·         Simplifying GST slabs: Possibly reducing to 3 main slabs (e.g., 8%, 15%, and 25%) instead of the current 5+ slabs.

·         Easing compliance: Introducing AI-driven return filing, single annual filing for small taxpayers, and real-time reconciliation.

·         Revenue stability for states: Ensuring fair compensation mechanisms and expanding GST coverage.

·         Curbing evasion: Expanding e-invoicing, AI-driven audit trails, and integrating GST data with income tax.

·         Encouraging growth sectors: Rationalizing GST rates for manufacturing, exports, MSMEs, and sunrise industries like EVs, green energy, and digital services.

This reset aims to make GST business-friendly, technology-driven, and globally competitive.

Key Elements of the GST Reset

1. Rationalization of Tax Slabs

·         Moving towards fewer tax slabs to reduce disputes and confusion.

·         Essential goods likely to remain at 0% or 5%, while luxury/sin goods remain at 28% with cess.

·         Middle slabs (12% and 18%) could be merged into one standard rate.

·         This would make GST simpler, predictable, and easier for businesses to follow.

2. Technology-Driven Compliance

·         The GST Network (GSTN) is becoming more robust with real-time invoice matching.

·         E-invoicing for all businesses ensures better compliance and reduces tax evasion.

·         AI tools may soon auto-populate returns, reducing manual errors.

·         Small taxpayers may get quarterly or annual return options, cutting down compliance cost.

3. Focus on MSMEs

·         MSMEs contribute significantly to employment and GDP but struggle with compliance.

·         Under the GST reset, proposals include:

o    Higher exemption threshold for small businesses.

o    Simplified quarterly filings under composition schemes.

o    Easier input tax credit claims.

4. Expanding GST Base

·         Currently, alcohol, petroleum products, and real estate are outside GST.

·         The reset may bring these sectors under GST to widen the tax base and reduce cascading taxes.

·         This would also increase transparency and state revenues.

5. Reducing Litigation

·         The GST Council may issue clearer guidelines and advance rulings.

·    A National Appellate Authority for Advance Rulings (NAAAR) has been proposed to ensure consistency across states.

·         Predictability in tax rulings will reduce disputes.

6. Supporting Growth Sectors

·         Lower GST rates on EVs, renewable energy, healthcare, insurance, and education to promote inclusive growth.

·         Rationalizing taxes for exports, IT services, and startups to make India a global hub.

Benefits of the Great GST Reset

1.      Ease of Doing Business

    Simpler tax slabs and easier compliance will save businesses time and money.

2.      Boost to MSMEs

   Reduced compliance burden and better tax credit flow will encourage MSME growth.

3.      Revenue Stability

   Wider tax base and better compliance tools will ensure steady revenue for both states and the center.

4.      Global Competitiveness

    A simplified GST system will attract foreign investors, improve India’s ranking in the World Bank’s Ease of Doing Business Index, and strengthen the “Make in India” initiative.

5.      Consumer Benefits

    Reduced tax disputes and better clarity will ensure fair pricing and reduced tax burden on common goods.

Challenges in the GST Reset

1.      Political Consensus

    GST is a cooperative federalism model, requiring consensus among states and the center.

  States fear loss of fiscal autonomy if GST rates are drastically restructured.

2.      Revenue Concerns

  Reducing slabs may initially impact revenue collection. Balancing lower tax rates with higher compliance will be critical.

3.      Technology Adoption

 While AI-driven compliance tools are promising, digital literacy and infrastructure gaps in rural areas remain a challenge.

4.      Transition Period

   Businesses may face short-term disruptions during the transition to a new GST structure.

5.      Global and Domestic Pressures

    Global economic slowdown, inflation, and rising fiscal deficits could complicate large-scale reforms.

The Road Ahead

The Great GST Reset will not be a one-time event but a phased reform:

·         Short-term (2025-26): Rationalization of tax slabs, simplified compliance for MSMEs, wider adoption of e-invoicing.

·         Medium-term (2026-27): Bringing petroleum and alcohol under GST, strengthening dispute resolution mechanisms.

·         Long-term (2027 onwards): A fully digital, AI-driven GST ecosystem with fewer slabs, minimal litigation, and integration with global taxation standards.

If implemented effectively, the reset will make GST a true game-changer for India’s economic growth story.

Conclusion

The Goods and Services Tax was a bold reform aimed at unifying India’s complex taxation system. While it has delivered significant benefits, structural challenges remain. The Great GST Reset is India’s opportunity to redesign its indirect tax framework—making it simpler, transparent, and growth-oriented.

With rationalized tax slabs, reduced compliance burden, wider tax coverage, and technology-driven enforcement, GST can become a world-class tax system. It can drive India’s economic transformation, support businesses, ensure revenue stability, and ultimately benefit consumers.

As India moves towards becoming a $5 trillion economy, a well-executed GST reset will be one of the most critical reforms shaping the nation’s future.

FAQs on the Great GST Reset

Q1. What is the Great GST Reset?
The Great GST Reset refers to India’s efforts to simplify GST by reducing tax slabs, easing compliance, expanding the tax base, and making it more taxpayer-friendly.

Q2. Why is GST being reset?
The current GST structure has multiple slabs, high compliance costs, and frequent disputes. Resetting GST aims to make it simpler, predictable, and growth-driven.

Q3. Will GST rates come down after the reset?
The government is considering merging slabs to reduce complexity. While some goods may see lower taxes, others may see minor increases for revenue balance.

Q4. How will MSMEs benefit from the reset?
MSMEs will benefit from simplified returns, higher exemption thresholds, and easier credit flow, reducing compliance costs.

Q5. Will petrol, diesel, and alcohol come under GST?
The government is exploring the possibility of including petroleum and alcohol under GST, but this will require consensus among states.

Q6. How will technology help in the GST reset?
AI-driven tools, e-invoicing, and real-time reconciliation will reduce errors, curb evasion, and make compliance easier.

Q7. When will the GST reset happen?
The reset will be phased out over the next few years, with initial reforms expected between 2025-26 and more comprehensive changes by 2027 onwards. 

GST 2.0 Explained: Everyday Goods Like Shoes, Clothes, and Essentials to Get Cheaper from September 22

GST 2.0: The Reform That Will Make Everyday Clothes and Shoes Cheaper (And What It Means for You) Everyday goods cheaper under GST 2.0

1. What is GST 2.0?

GST 2.0 is India’s sweeping reform of the Goods and Services Tax system, rolled out in September 2025. It replaces the existing four-slab tax structure with a simpler model based on two main rates—5% and 18%, plus a new 40% “sin and luxury” bracket. The aim? Streamline taxation, boost consumption, and rein in inflation.

Timing matters

These changes take effect from September 22, just in time for the Navratri and festive shopping season—an ideal moment for economic stimulus.

 

2. What’s Getting Cheaper—and Why It Matters

Your day-to-day essentials are about to cost less

A wide array of household items—soap, shampoo, toothpaste, kitchenware, and toothbrushes—move from 18% to the low 5% bracket.

Bread, butter, and more hit the zero GST sweet spot

Staples like UHT milk, paneer, chapati, and parathas are now GST-free. That’s food for thought for budgeting families.

Indulgences get a break too

Chocolate, jams, pastries, namkeen, and dry fruits—previously taxed at up to 18%—are now lumped into the 5% bracket. A treat without the tax pinch.

Shoes, clothes, and school essentials come under tax relief

Footwear and apparel priced up to ₹2,500 see a drop to 5% GST (down from 12%). Notebooks, pencils, maps, and other school supplies also enjoy tax relief.

DIY, home, and farming tools also benefit 

Items like fertilizers, drip irrigation tools, solar cookers, pressure cookers, and mixer-grinders—all fall into the 5% bracket, making farming and household routines more affordable.

More affordable healthcare

Critical items—life-saving drugs, surgical gear, oxygen cylinders—are now either tax-exempt or taxed at 5%, offering healthcare cost relief.

3. The Flip Side: What’s Getting Costlier GST tax changes India

Premium apparel takes a hit
Garments and footwear priced above ₹2,500 per item will now attract 18% GST, up from the old 12%.

Industry groups are worried
The Retailers Association of India (RAI) and Clothing Manufacturers Association of India (CMAI) warn this may hit the aspirational middle class, dampen retail demand, and impact traditional handloom and artisan segments.

Luxury and “sin” goods get a steep tax uplift
A new 40% tax slab is introduced for sin and luxury items like premium vehicles, yachts, and certain high-end consumer goods—designed to raise revenue and curb excess spending.

 

4. Economic Impact: Winners and Losers

Consumers win across the board
Lower tax rates on everything from food to clothing to fertility items could slash household bills by up to 1.1% of inflation, giving consumers some much-needed breathing room.

Exporters and artisans receive a boost
Handicrafts, hand‐embroidered goods, and traditional footwear now taxed at 5% bring optimism to cottage industries, especially ahead of festival season.

Auto, electronics, and appliance sectors on the rise 
Price drops in TVs, small cars, cement, and air conditioners are expected to stimulate festive-season demand and spur industrial growth.

But premium and fashion sectors reel
Global labels like Zara, Levi’s, Nike, and H&M may face lower demand as middle-class consumers pull back due to higher GST.

 

5. Voices from the Market

Industry asks for simplicity
RAI advocates for a flat GST rate across categories, to remove confusion and ease the load on retailers.

Not all economists are convinced
Prudent voices like economist Montek Ahluwalia suggest a single 14% rate might be more effective than multiple slabs, emphasizing simplicity and better revenue outcomes.

 

6. Your Spending, Simplified

Here’s a breakdown of what gets cheaper—and what gets costlier:

Category	Price Range	GST Old → New	Consumer Effect
Daily essentials & toiletries	Most price points	18% → 5%	Cheaper household goods
Staple food & bread (milk, paneer, roti)	Household essentials	5% → 0%	Lower grocery bills
Apparel & footwear ≤ ₹2,500	Budget clothing	12% → 5%	More affordable clothing
School & stationery	Books, maps, pencils	12% → 0%	Cheaper education supplies
Healthcare supplies	Lifesaving items	12/18% → 5% or 0%	Reduced medical costs
Premium garments & accessories	> ₹2,500	12% → 18%	Higher costs for branded goods
Luxury/sin items	High-end goods	28% → 40%	Expensive luxury experience

 

7. What You Can Do: Tips & Takeaways GST council meeting updates

• Smart shopping: Stock up on essentials now while they’re cheaper.
• Budget clothes wisely: Choose apparel under ₹2,500 to avoid tax hikes.
• Support local: Handloom and artisan products are now more competitively priced.
• Watch purchases: Postpone luxury buys—tax increases make them more expensive.

 

Final Word

GST 2.0 is a bold move to make everyday goods affordable and spur demand.
By reducing tax on essentials like food, toiletries, school supplies, and affordable apparel, the reforms provide relief to Indian households. Yet the higher tax on premium goods reflects the government's balancing act—promoting simplicity and spending power while protecting fiscal health through new sin and luxury levies.

Ultimately, this reform rewrites pricing dynamics in India—from kirana stores to high-street fashion. As consumers, retailers, and policymakers adjust, the long-term effectiveness of GST 2.0 will prove whether simplification truly meets sustainability.

 

Frequently Asked Questions (FAQs)

Q1: What is GST 2.0?
GST 2.0 is India’s new Goods and Services Tax reform that simplifies the tax structure into fewer slabs, making essentials like food, shoes, and clothes cheaper.

Q2: From when will the new GST rates apply?
The revised GST rates will come into effect from September 22, 2025, just ahead of the festive season.

Q3: Which goods are getting cheaper under GST 2.0?
Everyday goods like soap, toothpaste, shampoo, footwear below ₹2,500, budget clothing, school supplies, and some food items will now be taxed at 5% or 0%.

Q4: Will premium clothing and footwear also get cheaper?
No, clothes and shoes priced above ₹2,500 will actually become costlier as GST rises from 12% to 18%.

Q5: How does GST 2.0 affect household budgets?
Families can expect relief on daily essentials, groceries, and affordable apparel, which will bring down overall monthly expenses.

Q6: Are luxury goods included in GST 2.0 changes?
Yes. Luxury items and “sin goods” like premium cars, tobacco, and yachts now fall under a new 40% GST slab.

Q7: What does this mean for students and parents?
School essentials like books, notebooks, maps, pencils, and uniforms will get cheaper, easing education costs.

 Conclusion

GST 2.0 is a big relief for the common man in India. By cutting taxes on daily essentials, food, affordable clothing, shoes, school supplies, and household products, it puts more money back in the pockets of families. At the same time, it raises taxes on premium and luxury goods, balancing affordability with revenue needs.

This new GST structure will not only boost consumer demand during the festive season but also support local artisans, weavers, and small businesses by making their products more competitive. While high-end brands may feel the pinch, the broader economy and households stand to benefit.

In short, GST 2.0 is set to make life easier for everyday consumers while reshaping India’s retail and economic landscape.

GST supply meaning Scope of Supply in GST: A Complete Guide to Section 7 of CGST Act

GST Section 7: Understanding the Scope of Supply under GST

       Introduction

The Goods and Services Tax (GST), introduced in July 2017, has changed India’s indirect taxation system by creating a unified, destination-based tax. To understand GST properly, one must know what is considered a “supply” under GST law, because supply is the very foundation on which GST is levied.

This is where Section 7 of the CGST Act, 2017 comes into play. Section 7 defines the Scope of Supply, i.e., what transactions are treated as supply of goods or services and are liable to GST.

In this blog, we’ll break down GST Section 7 in simple words, explore its provisions, examples, exceptions, importance for businesses, and address frequently asked questions.

 

What is Section 7 of the CGST Act?

Section 7 of the Central Goods and Services Tax (CGST) Act, 2017 defines the term “Supply”, which is the taxable event under GST.

In simple terms:

• Supply includes all forms of transactions where goods or services are provided for consideration (payment), in the course of business.
• Some activities are treated as supply even without consideration (like transactions between related parties).
• Certain transactions are considered supply by way of deeming provisions, even if they don’t look like supply in a traditional sense.

Without supply, GST cannot be levied. Hence, Section 7 forms the backbone of GST law.

 

Key Provisions of Section 7

Section 7 has several subsections explaining what is covered under the scope of supply:

1. Section 7(1): Supply Includes

Supply includes all forms of:

1. Sale – Transfer of ownership of goods for a price.
2. Transfer – Giving goods/services to another person (with or without ownership transfer).
3. Barter or Exchange – Goods or services exchanged without money. Example: Trading wheat for rice.
4. License – Allowing someone to use property, goods, or services legally. Example: Software license.
5. Rental – Renting out goods or property.
6. Lease – Granting rights to use goods or property over a period.
7. Disposal – Disposing of business assets, such as selling old machinery.

👉 All of the above qualify as supply when they are for consideration (payment) and in the course of business.

 

2. Section 7(1A): Classification of Goods or Services

The government has the power to decide whether a particular activity is considered as:

• Supply of goods, or
• Supply of services

This classification helps in applying the correct tax rate and compliance rules.

 

3. Section 7(2): Activities Excluded from Supply

Certain activities are not treated as supply under GST. These are mentioned in Schedule III of the CGST Act.

Examples:

• Services by an employee to an employer.
• Sale of land and completed buildings.
• Funeral services.
• Actionable claims (other than lottery, betting, and gambling).

This ensures that only taxable transactions come under GST.

 

4. Section 7(3): Government’s Power

The Government, on the recommendation of the GST Council, may notify specific activities as supply of goods or services.

This allows flexibility to adapt to changing business models and economic needs.

 

Schedule I: Supply Without Consideration

Section 7 also refers to Schedule I of the CGST Act, which covers activities treated as supply even without payment/consideration.

Examples include:

1. Permanent transfer of business assets (like giving machinery for free).
2. Supply between related persons or between distinct persons (e.g., transfer between head office and branch in another state).
3. Supply of goods between principal and agent.
4. Import of services from a related person or from a business outside India (for business purposes).

 

Schedule II: Supply of Goods or Services

Schedule II helps clarify whether a particular activity is to be treated as supply of goods or services.

Examples:

• Renting of immovable property → Supply of services.
• Works contract → Supply of services.
• Transfer of business assets → Supply of goods.

 

Schedule III: Activities Not Treated as Supply

As per Section 7(2), Schedule III specifies activities that are outside GST scope.

Examples:

• Services by an employee to employer (salary).
• Sale of land.
• Sale of completed building.
• Services of MPs, MLAs, Panchayat members, and other constitutional posts.
• Services by courts and tribunals.

 

Examples to Understand Section 7

Let’s simplify Section 7 with some practical examples:

Example 1: Sale of Goods

A shopkeeper sells a mobile phone for ₹20,000. This is a supply of goods, liable to GST.

Example 2: Barter Transaction

A farmer gives 50 kg rice to another farmer in exchange for 30 kg wheat. No money involved, but still considered supply under GST.

Example 3: Employee Salary

An employee receives ₹50,000 per month salary. This is an employment service, which falls under Schedule III and is not taxable under GST.

Example 4: Supply Without Consideration

A company transfers machinery worth ₹5 lakh from its head office in Delhi to its branch in Maharashtra. Even though no payment is made, this is treated as supply under GST.

Example 5: Renting a House

A property owner rents out commercial property for ₹1 lakh/month. This is considered supply of services and attracts GST.

 

Importance of Section 7 for Businesses

1. Defines Tax Liability – Businesses know what transactions are taxable.
2. Avoids Double Taxation – Clarifies whether something is goods or services.
3. Compliance Clarity – Helps businesses issue correct GST invoices.
4. Covers Modern Transactions – Barter, digital services, and free supplies are covered.
5. Prevents Disputes – Provides a structured approach for classification.

 

Challenges in Section 7

While Section 7 is comprehensive, businesses face challenges like:

1. Classification Issues
• Sometimes confusion arises on whether something is goods or services (e.g., software).
2. Free Supplies
• Businesses struggle to determine taxability of free samples or promotional items.
3. Schedule Overlaps
• Differentiating between Schedule II and Schedule III can be confusing.
4. International Services
• Import/export of services creates compliance complexities.

 

Judicial Rulings on Section 7

Courts have interpreted Section 7 in several cases:

• Barter Transactions: Courts confirmed that barter without money still counts as supply.
• Employer-Employee Relationship: Salary and employment contracts are outside GST.
• Free Samples: Some rulings clarified that free samples given for business promotion may not be taxable if covered under Schedule III.

 

Section 7 in Simple Words

To put it simply:

• If you sell, transfer, exchange, rent, lease, or license goods/services → It’s a supply.
• If you provide something free to a related party → it’s a supply.
• If you’re just paying salary or selling land/buildings → it’s not supply.

 

Practical Tips for Businesses

1. Check Schedule I, II, III before classifying transactions.
2. Maintain detailed invoices for all supplies, even barter/exchange.
3. Consult experts for complex cases like works contracts or digital goods.
4. Stay updated with government notifications about reclassification.
5. File returns carefully to avoid penalties due to wrong classification.

 

Benefits of Section 7 for the GST System

• Uniform Definition of supply across India.
• Comprehensive Coverage of traditional and modern transactions.
• Flexibility with government’s power to notify new supplies.
• Transparency for taxpayers and businesses.

 

Conclusion

Section 7 of the CGST Act, 2017 defines the Scope of Supply, making it one of the most important provisions under GST law. It determines what activities are taxable, what is exempt, and how to classify goods and services.

For businesses, understanding Section 7 is crucial for compliance, accurate invoicing, and avoiding penalties. While classification issues may arise, the detailed schedules and judicial guidance help bring clarity.

Overall, Section 7 forms the backbone of GST, ensuring that India’s indirect tax system is fair, transparent, and business-friendly.

 

FAQs on GST Section 7

Q1. What does Section 7 of the CGST Act cover?
It defines the scope of supply, i.e., what transactions are considered as supply of goods or services under GST.

Q2. What is considered supply under GST?
Sale, transfer, barter, exchange, license, rental, lease, or disposal of goods/services in the course of business.

Q3. Is salary taxable under GST?
No, services by an employee to an employer in the course of employment are excluded from supply under Schedule III.

Q4. Is barter considered supply under GST?
Yes, even without money, barter and exchange transactions are considered supply.

Q5. What is Schedule I under Section 7?
Schedule I lists supplies that are taxable even without consideration, such as transfers between related persons.

Q6. What is Schedule II?
Schedule II classifies whether a transaction is supply of goods or services.

Q7. What is Schedule III?
Schedule III lists activities that are not considered supply, such as salary, sale of land, and services of MPs/MLAs.

Q8. Can government decide what is goods or services?
Yes, under Section 7(1A), government can notify classification of specific activities as goods or services.

 

Section 6 of CGST Act GST Section 6 Explained: Cross Empowerment of Central & State Tax Authorities

GST Section 6: Understanding the Mutual Empowerment of Tax Authorities Difference between Central and State GST officers

 Introduction

 When the Goods and Services Tax (GST) was implemented in July 2017, it replaced a complex web of indirect taxes such as VAT, service tax, excise duty, and CST. 

The idea was to simplify India's taxation system and ensure uniformity across the country. However, since GST is a dual taxation system—where both the center and states have the authority to impose and collect taxes—questions began to arise:

• Who will assess the taxpayers? 

• Who has the authority to collect taxes in special cases?

 • Can central and state tax officials work together?

To address such issues, Section 6 of the Central Goods and Services Tax (CGST) Act, 2017 has been introduced. It clearly defines the concept of cross-empowerment between central and state tax authorities.

 

In this blog, we will explain Section 6 of GST in simple words, explore its provisions, real-life examples, challenges, and its importance for businesses.

What is Section 6 of GST?

Section 6 of the CGST Act mentions the provisions related to the powers of the central and state government officials.

• It ensures that there is no duplication of tax assessments and clarifies who has the right to enforce the authority in a specific situation.        

• In simple words:
 

Central tax officials (who are working under the CGST Act) and state tax officials (who are working under the SGST Act) have been empowered to act on behalf of each other.

 • This means that any tax officer can issue notices, conduct assessments, and take action under both the CGST and SGST Acts, provided that the case is not already being handled by the other authority.

This principle is known as cross empowerment under GST. ।

Main provisions of Section 6

• Let's break down the important provisions of Section 6 to make them easier to understand:    

• 1 Powers of central and state authorities (Article 6(1)) 

• Officers appointed under the CGST Act are authorized to act as officers under the SGST/UTGST Act. • Similarly, officers under the SGST/UTGST are authorized to operate under the CGST Act. • This avoids duplication and ensures smooth functioning.

• 2. Prohibition on double action (Section 6(2)

If a specific case has already been assigned to a central officer, then the state officer cannot take that case, and vice versa. • This can help prevent taxpayers from being troubled by multiple processes in the same case by different officers.

            

 3. Terms and Conditions (Section 6(3)

The government may set conditions and restrictions for cross-empowerment. 

 This ensures that there is no abuse of power and maintains clarity between the center and the states.

1.Why is Section 6 important?

Section 6 is extremely important for businesses, taxpayers, and government officials because it: 

Prevents duplication of work, allowing businesses to avoid facing multiple assessments from central and state tax authorities for similar transactions.

Ensures smooth administration, enabling central and state officials to act in place of each other, which guarantees faster resolutions and compliance.

Reduces litigation by clearly defining jurisdiction, which minimizes unnecessary disputes between the center and the state. 6. Facilitates business.

 

Taxpayers do not think about which authority to contact. The single process carried out by one authority is binding. 

Real-Life Examples of Section 6 in Action

Let’s make this clear with practical examples:

Example 1:

A business in Delhi is being audited by the Central GST officer for FY 2023-24. In this case:

The State GST officer cannot initiate another audit for the same period.

 Only one proceeding will be valid, avoiding duplication.

Example 2:

A trader in Karnataka is found guilty of issuing fake invoices. Here:

 Both Central and State officers have the power to investigate.

But once one authority takes charge, the other cannot duplicate the same action.

Example 3:

An e-commerce business is operating across multiple states. A State officer in Maharashtra initiates a tax assessment under SGST Act. Due to cross empowerment:

That officer can also take action under the CGST Act.

This avoids the need for two separate assessments

Benefits of Cross Empowerment under Section 6

 Single Authority, Dual Powers

 Saves time for both taxpayers and authorities.

 Reduces confusion in jurisdiction.

 Improves Efficiency

Tax officers can act swiftly without waiting for coordination between Centre and State.

Better Resource Utilization

 Since officers can act on behalf of each other, workload distribution becomes easier.

 Uniform Implementation of GST

 Ensures that GST laws are applied consistently across India.

Challenges in Section 6

While Section 6 has many benefits, certain challenges exist:

 Jurisdictional Confusion

 Sometimes, businesses face confusion about whether a proceeding is under CGST or SGST.

2.Coordination Issues

If Central and State officers don’t coordinate properly, there could still be duplication of efforts.

3 Limited Awareness

small businesses may not fully understand how cross empowerment works.

 Possible Overlap in Investigations

 In fraud or evasion cases, both authorities may initiate inquiries, leading to disputes.

Section 6 and GST Council Decisions

The GST Council has played an important role in framing rules under Section 6. The Council decided that:

 Taxpayers with a turnover below ₹1.5 crore are generally handled by State tax authorities.

Taxpayers with a turnover above ₹1.5 crore are divided between Central and State authorities in a 90:10 ratio (90% by States, 10% by Centre).

This division ensures that both Central and State authorities have jurisdiction but also avoids overlap.

Section 6 in Simple Words

Think of Section 6 as a mutual agreement between the Centre and States:

 Either a Central officer or a state officer can act in your case.

 But only one authority will proceed at a time.

 Once a case is picked by one authority, the other cannot intervene in the same matter.

Judicial Interpretations of Section 6

Over the years, courts have also explained the importance of Section 6.

Courts have emphasized that dual proceedings are not allowed.

 Once jurisdiction is exercised by one authority, the other must step back.

This ensures that taxpayers are not burdened with multiple litigations.

Impact of Section 6 on Businesses

For businesses, Section 6 has had a significant impact:

Clarity in Tax Proceedings → They know only one authority will act.

Less Compliance Burden → No duplicate audits or investigations.

Better Trust in the GST System → Simplifies the taxpayer-government relationship.

More Transparency → Clear rules on who has jurisdiction.

Practical Tips for Businesses under Section 6

1.Maintain Proper Records

Since either Central or State officers can assess you, always keep your GST records updated.

2.Know Your Jurisdiction

Understand whether your turnover places you under State or Central jurisdiction.

3.Respond Promptly to Notices

If you receive a notice, check whether it is from CGST or SGST officer. Only one proceeding should exist.

4.Consult a Tax Expert

For complex cases, always consult a GST practitioner to avoid compliance issues.

Advantages of Section 6 for the Government

Efficient Use of Manpower: Both Centre and State can handle cases without duplicating efforts.

 Better Revenue Monitoring: Helps plug tax evasion through cooperation.

 Uniform Enforcement: Ensures GST rules are applied consistently nationwide.

Conclusion

Section 6 of the CGST Act is one of the most crucial provisions of the GST framework. It establishes the concept of cross empowerment between Central and State tax officers, ensuring smooth tax administration and preventing duplication of work.

For taxpayers, it provides relief from multiple proceedings, reduces compliance burden, and ensures fairness. For the government, it enables efficient resource utilization and uniform enforcement.

While challenges such as jurisdictional confusion and coordination issues exist, the benefits of Section 6 far outweigh them. It truly reflects the spirit of cooperative federalism, where both Centre and States work together to make GST effective and business friendly.

FAQs on GST Section 6 What is Section 6 of CGST Act in GST

Q1. What is Section 6 of the CGST Act?

Section 6 deals with cross empowerment of Central and State GST officers, allowing them to act on behalf of each other.

Q2. Can both Central and State officers act simultaneously on the same case?

No. Once one authority has taken up a case, the other cannot initiate proceedings on the same matter.

Q3. Why was Section 6 introduced?

It was introduced to prevent duplication of efforts, reduce taxpayer burden, and improve coordination between Centre and States.

Q4. Who handles small taxpayers under GST?

As per GST Council decisions, taxpayers with turnover below ₹1.5 crore are generally handled by State authorities.

Q5. What happens if both Central and State officers issue notices for the same case?

In such cases, judicial interpretation favors that only one proceeding should continue, and duplication is not allowed.

Q6. Does Section 6 apply to fraud and evasion cases?

Yes, both Central and State officers can initiate action, but once one authority takes charge, the other must step back.

Q7. How does Section 6 help businesses?

It ensures that only one authority conducts proceedings, reducing compliance burden and avoiding harassment.

 

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