The Comprehensive Evolution of India’s Indirect Taxation: A Strategic Analysis of GST 2.0 and the 2026 Economic Landscape
DOI:
https://doi.org/10.63300/arjst.2026.v3.i4.01Keywords:
GST 2.0, Indirect taxation reform, Fiscal federalism, Tax rationalization, Input tax credit (ITC), Compliance burden, AI automationAbstract
The Goods and Services Tax (GST) 2.0 framework, initiated following the 56th GST Council meeting in September 2025, represents the next phase of India's fiscal reform, focusing on structural optimization, revenue buoyancy, and technological integration. By consolidating rate slabs into a streamlined 5%, 18%, and 40% structure, the reform has significantly reduced administrative friction and improved affordability across key sectors such as automotive and infrastructure. As of February 2026, gross GST collections reached a record ₹22.08 lakh crore for FY 2024-25, indicating robust economic formalization. This paper examines the sectoral shifts, macroeconomic outcomes—including a projected 35 basis point reduction in retail inflation—and the technological leap toward AI-powered "Agentic Automation". Furthermore, it addresses the formal sunset of the compensation cess on February 1, 2026, and the resulting challenges for MSME compliance and cooperative federalism.
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References
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