PM Modi’s “Next-Gen GST Reform” Aims to Reduce Tax Burden; Two-Tier Structure Under Review by GST Council
In a major push for tax reform, the GST Council is expected to announce new Goods and Services Tax (GST) rates by September 22, according to government sources. The reform, which aligns with Prime Minister Narendra Modi’s Independence Day announcement, is aimed at reducing the tax burden on common citizens and simplifying the tax structure.
The likely implementation is expected to coincide with Navratri celebrations, making it a potential festive relief for consumers and businesses.
What the PM Promised
On August 15, while addressing the nation on the 79th Independence Day, Prime Minister Modi announced a plan to bring “next-generation GST reforms”:
“The government will bring next-generation GST reforms, which will bring down the tax burden on the common man. It will be a Diwali gift for you,” he said.
GST Council Meeting on September 3–4
The GST Council, headed by Finance Minister Nirmala Sitharaman and comprising finance ministers of all states and Union Territories, will meet on September 3 and 4 in New Delhi. The primary agenda is to discuss a simplified two-tier GST slab structure.
Proposed Two-Tier GST System
According to the Centre’s proposal submitted to the Group of Ministers (GoM):
- The new system will have two main slabs:
- 5% for ‘merit’ goods/services
- 18% for ‘standard’ items
- A special 40% slab will apply to select goods such as:
- Ultra-luxury cars
- Sin goods (e.g., tobacco, alcohol)
Currently, the GST structure includes four slabs: 5%, 12%, 18%, and 28%.
Notifications are expected to start rolling out 5–7 days after the Council’s decision.
The Three Pillars of GST Reform
As part of its broader economic strategy, the Centre outlined three key pillars for GST reform:
1. Structural Reforms
- Correction of inverted duty structures
- Resolving classification disputes
- Ensuring predictability and stability
2. Rate Rationalisation
- Reduction of tax on essential and aspirational goods
- Greater rate stability
- Simplified slab structure
3. Ease of Living
- Easier startup registration
- Pre-filled returns
- Faster refund processing
The reforms aim to boost economic efficiency, support “Atmanirbhar Bharat” (self-reliant India), and help India reach its goal of becoming the world’s third-largest economy.
If approved, the new GST rates could significantly simplify compliance, reduce the tax burden, and stimulate consumption—delivering a much-needed festive boost to the Indian economy. With the Council meeting just weeks away, all eyes are on the final structure that could redefine India’s indirect tax landscape.
Related News : Key Panel Accepts Centre’s Proposal to Cut GST Slabs to Two, Down from Four
