Bengaluru, Jan 19: Ahead of the Union Budget 2026–27, industry bodies, entrepreneurs and policy stakeholders have set expectations around further simplification of the Goods and Services Tax (GST) alongside other tax measures to strengthen ease of doing business, improve liquidity for small enterprises and support sustained economic growth, particularly for entities operating across states and e-commerce platforms. Calls for enhanced tax clarity, faster credit flows, and reduced compliance barriers are gaining prominence in pre-budget consultations with the Ministry of Finance.

Despite GST 2.0’s rollout last year and ongoing digitization efforts, small and medium enterprises continue to face complex compliance requirements that affect their operational efficiency and working capital. Compliance for multi-state operations still involves separate registrations, multiple state-wise filings, and repeated audits, processes that increase administrative burden, especially for micro and small sellers. Input Tax Credit (ITC) accumulation due to inverted duty structures and procedural refund delays are cited as persistent stress points affecting cash flows. Such challenges are frequently highlighted in industry pre-budget representations as areas where targeted reform could materially support growth and competitiveness. 

Against this backdrop, speaking at GST Samvaad 2.0, Dr. Sasmit Patra, Member of Parliament (Rajya Sabha), emphasised the need for the next phase of GST reforms to build on trust and system maturity. 

“GST was envisioned as One Nation, One Tax to enable ease of doing business, especially for small traders and entrepreneurs. While rate rationalisation and digitisation have improved, the compliance burden continues to be disproportionately high for small sellers. Today, they are burdened with multiple registrations, duplicated audits, and working capital locked in accumulated input credits despite operating within a fully digitized tax ecosystem. If states can trust one another to collect and transfer tax revenues across borders, the same principle should apply to compliant businesses. Simplifying registrations, harmonizing audits, and enabling faster resolution of accumulated credits are essential to ensure GST genuinely supports growth while safeguarding revenue integrity.” 

For businesses operating across states, GST compliance continues to involve multiple registrations, parallel audits, and working capital pressures arising from accumulated input tax credits—particularly in sectors affected by inverted duty structures, where higher taxes on inputs lead to credits remaining unutilised and constrain cash flows needed for day-to-day operations and expansion. E-commerce sellers and micro-entrepreneurs also face practical challenges due to continued reliance on physical documentation, despite the availability of digital alternatives. 

Given the economic significance of small and medium enterprises, which contribute nearly 30% of GDP and employ over 11 crore people, policymakers have an opportunity to pursue calibrated, trust-led GST reforms that simplify compliance, improve liquidity, and support inclusive growth as the tax framework continues to evolve.