All India Transporters Welfare Association

GST 2.0 and the Road Ahead: Op....

The launch of the Goods and Services Tax in July 2017, introduced with the slogan “One Nation, One Tax,” was envisioned as a historic reform to unify India’s indirect tax system. For the road transport sector, often described as the backbone of the economy, it inspired both optimism and hesitation. The reform promised efficiency and simplicity, but in practice, GST 1.0 created several hurdles that weighed heavily on transporters. With rates split across 5%, 12%, 18%, and 28%, and further burdened by cesses, the system bred constant classification disputes and uncertainty. Essential inputs such as trucks, tyres, spare parts, and even compulsory insurance were taxed at higher rates, inflating acquisition and operating costs. Compliance added to the burden, as transporters had to navigate both the Forward Charge Mechanism, where they paid GST directly, and the Reverse Charge Mechanism, where the recipient bore the liability. This dual system created confusion, raised compliance costs, and imposed a heavy administrative load, particularly on small operators and Goods Transport Agencies with limited resources. In response to years of feedback and industry advocacy, the government has now announced GST 2.0, a comprehensive redesign of the tax framework, which will take effect on September 22, 2025. Unlike the incremental adjustments of the past, this version is a complete overhaul aimed at addressing the structural shortcomings of GST 1.0. The focus is on simplifi....