"Next-Gen GST marks a shift from revenue maximisation to compliance facilitation." Critically examine with reference to rate rationalisation and process reforms.

The 56th GST Council meeting approved Next-Gen GST, which took effect on 22 September 2025. It replaced four slabs with two main rates of 5% and 18%, plus a 40% special rate [1]. Lower rates and simpler processes do signal a move towards facilitation. Revenue concerns, however, have been rebalanced rather than abandoned.

Rate rationalisation: lower burden, wider base

• Revenue given up by choice: small cars, two-wheelers, ACs and cement moved from 28% to 18%. Life-saving drugs moved to Nil or 5%, and farm machinery from 12% to 5% [2].
• Less regressive: staple foods became tax-free and processed foods were set at 5% [3].
• Fewer disputes: merging the 12% and 28% slabs reduces classification disputes and inverted duty structure cases [1].

Process reforms: easing compliance

• Faster refunds: 90% provisional refund for inverted-duty claims, on the same lines as zero-rated supplies [1].
• Simplified registration for small, low-risk businesses [1], with registration within three working days [4].
• Broader base: taxpayers rose from 66.5 lakh in 2017 to 1.65 crore in May 2026 [4]. This shows that compliance, not high rates, sustains revenue.

Why the shift is incomplete

• Revenue logic persists: a 40% rate applies to tobacco, pan masala, aerated drinks and luxury goods [2]. The compensation cess on tobacco stays until pandemic-era loans are repaid [1].
• Short-term strain: gross domestic GST revenue grew only 2% year on year in October 2025 [5].
• States' fiscal risk: the 2017 Compensation Act assured States 14% annual revenue growth for five years [6]. That guarantee has lapsed, and no similar cushion came with the 2025 cuts. Because Centre and States share the tax base under Article 246A, States cannot set rates independently.
• Reforms partly provisional: the 90% refund began through CBIC instructions while the CGST Act amendment was pending [1].

Next-Gen GST therefore rebalances revenue goals rather than abandoning them. It bets that a wider, more compliant base will make up for lower rates. To complete the shift, the next phase should publish State-wise revenue-impact estimates and set statutory refund timelines. It should also use Jan Vishwas-style civil penalties for procedural lapses. Done well, this would fulfil the cooperative-federalism promise of the GST Council under Article 279A and make GST a truly "Good and Simple Tax" for Viksit Bharat @2047.