GST 2.0: Emerging Reforms, Digital Compliance and Future of Indirect Taxation in India

The Goods and Services Tax (GST) system in India has witnessed a paradigm shift since the September 2025 rate rationalization, referred to as GST 2.0. In this research paper, the structural reforms initiated via the recommendations of the 56th GST Council have been examined, namely rate consolidation, the discontinuation of the compensation cess on selected goods and the increase in digital compliance architecture. The study is based on a mixed method analysis of government documents and economic survey findings, and draws on the recent literature and academic discourse on the matter. The results of the research reveal that the rationalization process has led to the narrowing of the tax slab structure, to reduced inflationary effects on mass consumption goods, and to an incentive-compatible equilibrium in the interaction of taxpayers and administration via automatic ITC matching and e-invoicing system. It is also concluded that certain problems, such as inverted duty structure distortion, still exist and need to be addressed. The final part of the paper asserts that in the future the evolution of the Indian indirect taxation system should be based on trust-based compliance, dispute resolution effectiveness, and on achieving refund neutrality for capital goods and input services.