The overall expectations from the inaugural budget of the new government, on their third consecutive term, is high. It is expected that this Budget could unveil initiatives aimed at driving key sectoral growth, building infrastructure to the last mile and encouraging new age technology manufacturing.

In the pre-GST era, Union Budget announcements led to key amendments in central indirect tax laws. However, with the implementation of GST, amendments to GST laws are now channeled through GST Council decisions. This shift has diminished the Union Budget's role to making limited announcements largely tied to the implementation of GST Council’s recommendations.

As a result, the 53rd GST Council meeting, that was convened a month before the scheduled Union Budget, made several beneficial recommendations for taxpayers and businesses. Most recommendations have already been implemented through amendments in rules and issuance of circulars, leaving those for which appropriate legislative changes are required, through the Parliament and the state legislature. Accordingly, one can anticipate that announcements in the upcoming Union Budget would be around implementing these legislative changes which include –

Amnesty scheme for ongoing disputes by waiver of interest and penalties for fiscal years 2018, 2019, and 2020, subject to payment of full tax amount by March 2025;

Reduction in pre-deposits amounts for filing GST appeals before Appellate Authority and Appellate Tribunal;

Common time limit for proceedings against both bona fide non-compliances and fraudulent tax evaders;

Sunset date for profiteering complaints; and

Extra Neutral Alcohol (ENA) to be outside the levy of GST.

As stated earlier, given that new GST law changes are generally not announced unless the Council has made recommendations, the Union Budget’s spotlight seems to have waned. Nonetheless, India Inc. would still expect the Budget to pave the way for transformative changes and for a more simplified GST regime (commonly termed as GST 2.0). It is expected that the envisioned reforms would lead to digitized compliances for streamlining internal processes and aiming for operational ease and efficiency.

Industry stakeholders anticipate a strategic roadmap for rate rationalization (three-rate structure and moderation of rates) across key sectors. As always, one of the expectations is merger of two tax slabs of 12% and 18% into a single tax slab. This change alone could significantly minimize the prevalent classification and tax rate disputes.

The real estate sector, which significantly contributes to the nation’s GDP, has been demanding comprehensive tax reforms such as reduction in applicable GST rates, allowing full input tax credit (ITC) and increase in monetary and carpet area limits for affordable projects.

Clear roadmap on inclusion of petroleum products, natural gas and electricity within GST ambit, in consultation with the states, is something which can provide rejoice to the industry at large.

Nothing would be more welcomed than announcements on simplification in conditions attached to ITC claim, specially on linkages with compliances by the suppliers. GST 2.0 should delink credit eligibility of customers with seller’s non- compliances, unless it is a case of collusion between the buyer and seller to evade taxes.

Another noteworthy proposal that could bring a big relief in terms of better working capital, for companies with presence across states, is allowing offsetting of ITC across the states.

A scheme like 'One Nation One Registration' would bring joy to service sector players facing challenges in terms of state level GST compliances and widespread litigations across the nation. These measures would not only reduce administrative complexities but also enhance compliance efficiency without compromising state revenues.

Echoing the success of faceless assessments in direct taxes, introduction of faceless communication for GST refunds, departmental audits, notices, etc., could be introduced in a phase-wise manner. Such advancements aim to enhance transparency, minimize bottlenecks, and fortify taxpayer confidence in the system.

In conclusion, while the Union Budget's role in direct GST policymaking has evolved, its potential to usher in transformative reforms remains pivotal. There is a need for a growth-focused tax environment to drive India's economic development. Anticipation mounts as stakeholders look to the Budget not just for fiscal direction but as a harbinger of structural reforms that could redefine India's tax landscape.