Lagatar24 Desk
New Delhi: The Central Government is preparing a major overhaul of the Goods and Services Tax (GST) that will simplify rates and reduce the tax burden on citizens from this Diwali. Prime Minister Narendra Modi announced the move during his Independence Day speech, highlighting that the next phase of GST reforms will benefit the common man, farmers, MSMEs, and the middle class. The finance ministry has confirmed that the current four-slab system of 5%, 12%, 18%, and 28% will be replaced by two main slabs—standard and merit—along with special rates for select items.
Three Pillars of the Reform Plan
The proposed GST changes focus on three key areas—structural reforms, rate rationalization, and ease of living. Structural reforms aim to correct inverted duty structures, resolve classification disputes, and provide long-term clarity on rates. Rate rationalization will lower taxes on essential and aspirational goods, enhance affordability, and simplify the system into two slabs. For ease of living, measures include technology-driven registrations, pre-filled returns, and faster automated refunds, particularly for small businesses and exporters.
Implementation and Economic Impact
The reforms are designed to strengthen economic sectors, boost consumption, and improve business confidence. With the end of the compensation cess, the government has more fiscal space to realign tax rates sustainably. The Group of Ministers (GoM) formed by the GST Council is reviewing the proposals, and recommendations will be taken up in the council’s next meeting. The Centre aims to roll out the changes within the current financial year so that citizens can enjoy the benefits by Diwali.
