On India's 79th Independence Day, Prime Minister Narendra Modi announced significant Goods and Services Tax (GST) reforms to benefit citizens and small businesses. The Finance Ministry has proposed a simplified two-tier GST system comprising "standard" and "merit" slabs, alongside special rates for select items.
Key Highlights of the Proposed GST Reforms
- Two-Slab Structure: Replaces the current four-tier structure (5%, 12%, 18%, 28%) with "standard" and "merit" slabs.
- Implementation by Diwali: PM Modi announced GST reforms will be implemented by Diwali 2025, reducing tax burden and benefiting small industries.
- Proposal Basis: Center's proposal to Group of Ministers (GoM) focuses on:
- Structural Reforms
- Improving Rates
- Making Life Easier
- GST Council Meeting: Expected in September under Finance Minister Nirmala Sitharaman to discuss rate rationalization.
Expected Benefits
- Relief for citizens and small businesses through reduced tax burden.
- Enhanced affordability and consumption of essential and aspirational goods.
- Simplification of tax compliance for businesses.