Good News on GST! Govt Plans Just Two Tax Slabs Instead of 5-28% Rates Finance Ministry Reveals Key Details
Big GST Relief Coming Soon!
In his Independence Day speech, Prime Minister Narendra Modi
gave a big Diwali gift to the common man. the burden of Goods and Services Tax
(GST) is likely to come down with the next phase of reforms.
PM Modi highlighted that the upcoming GST changes are
designed to help ordinary citizens, farmers, the middle class, and small and
medium businesses (MSMEs).
According to details shared by the Finance Ministry, the
government is considering moving to a two-slab GST system – one standard rate
and one lower "merit" rate – along with a few special rates for
select items. This will replace the current complicated structure of 5%, 12%,
18% and 28% slabs. The final decision is expected in the next GST Council
meeting.
On the 79th Independence Day, PM Modi also underlined how
GST, introduced in 2017, has been a game-changing reform for the country’s
economy.
Key Points on the Upcoming GST Reforms
1.Structural
reforms – Making GST simpler and stronger.
2.Rate
rationalization – Fewer tax slabs, easier compliance.
Ease of Living – Relief for Consumers and Businesses
The government has already shared its GST reform proposals
with the Group of Ministers (GoM) under the GST Council for review. The core
idea behind these next-generation GST reforms is to adjust tax rates in a way
that benefits everyone – especially the common man, women, students, farmers,
and the middle class.
The reforms also aim to end long-standing issues like
classification disputes, inverted duty structures, and unstable tax rates. By
doing so, the government hopes to make GST simpler, fairer, and more
predictable. The bigger picture: a stronger economy, more sectoral growth, and
a friendlier environment for doing business.
Key Pillars of the Proposed GST Reforms
1. Structural Reforms
• Fixing
inverted duty structures (when input tax is higher than output tax) so
businesses don’t suffer from credit accumulation and can focus on domestic
value addition.
• Streamlining
classification rules to reduce disputes, simplify compliance, and create
fairness across industries.
• Giving
long-term clarity on GST rates and policies to build industry confidence and
help businesses plan better.
2. Rate Rationalization
• Lowering
taxes on essential and aspirational goods to improve affordability and boost
consumption.
• Simplifying
the tax structure by moving to just two slabs – standard and merit – with a few
special rates for select items.
• Using
the fiscal space created by the end of the compensation cess to realign tax
rates for long-term sustainability of GST.
These reforms are designed not just as a tax adjustment, but
as a roadmap for India’s economic growth, where GST becomes easier to
understand, fairer for businesses, and lighter on the common man’s pocket.
3. Ease of Living
The government also wants GST to be simpler and hassle-free,
especially for small businesses and startups. The focus is on using technology
to save time and reduce paperwork.
Key measures being considered include:
• Easy
registration: Faster, tech-driven registration processes, designed to be
seamless for entrepreneurs and small firms.
• Pre-filled
returns: Minimizing manual work and reducing chances of mismatches or errors.
• Quicker
refunds: Automated and time-bound refund processing, especially for exporters
and businesses facing inverted duty structures.
The Centre has shared these reform ideas, built on the three key pillars (structural reforms, rate rationalization, and ease of living), with the Group of Ministers (GoM) for further discussion.
The GST Council will take up the GoM’s recommendations in its upcoming meeting. The government is keen to push for early implementation, so that citizens and businesses can start experiencing the benefits within this financial year itself, according to the Ministry of Finance.
