Finance Minister Nirmala Sitharaman announced on Thursday that a faceless system is now operational for 2 lakh central GST payers operating in multiple states, marking a significant milestone in GST reforms. As reported by The Times of India, this development follows up on rate rationalisation and process reforms undertaken by the Centre and states. The system represents the next phase of GST's digital evolution, with the government keeping the door open for further fine-tuning as and when required. The effective GST rate on all goods and services has come down from 11.8% to 10.8% following last year's rate cuts, with 99% of issues resolved through procedural simplification.
The Centre plans to bring a centralised tax administration for these multiple CGST jurisdiction for taxpayers with a unified window for all their CGST-related functions. According to The Times of India, this comprehensive framework will cover scrutiny of returns, audit, adjudication, appeal, taxpayer services and grievance redressal. The proposed system will offer faceless assessment to all 6.5 million registrations under the central tax administration, addressing administrative challenges faced by large businesses with operations across multiple locations. As reported by The Economic Times, there are over 1.70 crore registered assessees under GST, out of which over 73.5 lakh are under central formulations, while over 97 lakh are under States and UT (with legislatures).
The new faceless framework will utilize artificial intelligence and data analytics for efficiency in case assignment. According to Finance Ministry sources, cases will be assigned randomly using artificial intelligence and data analytics to specialised teams rather than local, individual officers. This automated allocation system is similar to the Income Tax Department's faceless assessment framework, which uses automated allocation and dynamic jurisdiction to improve efficiency, transparency and accountability by eliminating taxpayer-officer interface to the extent technologically possible. The working group within the Central Board of Indirect Taxes and Customs has submitted its report, with the proposed framework put up for public consultation before the next budget and will be implemented during the next financial year.
Going forward, the government intends to implement rate changes as an annual feature that will be implemented from April every year. As reported by The Times of India, FM Sitharaman stated that for the next-gen GST reforms, 99% of the issues have been addressed with everything on the process and rate side driven from a principle of trust. The minister emphasised that rate changes will now be an annual feature as part of the systematic approach to GST reforms. The government is currently working on the framework and is likely to seek feedback from stakeholders before final implementation, with the division of assessees between Centre and State decided based on the turnover of the assessees on a proportionate basis.
Industry experts anticipate significant benefits for multi-State enterprises, exporters and large manufacturers under the new system. Harpeet Singh, Partner at Deloitte, stated that if implemented thoughtfully, faceless assessment can mark the next phase of GST's digital evolution, balancing administrative efficiency with ease of doing business and fostering a more trust-based tax ecosystem. "For businesses, particularly those operating across multiple states, a faceless regime could lead to more objective decision-making, reduced compliance disruptions, and better predictability in tax outcomes," Singh noted. The system is expected to provide optimal utilisation of resources and team-based assessment with dynamic jurisdiction, eliminating the person-to-person interface between the taxpayer and the Department to the extent technologically feasible. For large companies with multiple GST registrations, a unified faceless mechanism could also help reduce duplication in assessments and provide greater consistency in the handling of tax-related proceedings.
