Prime Minister Narendra Modi on Sunday announced that the Centre has circulated the draft of next-generation Goods and Services Tax (GST) reforms to all states, seeking their cooperation for implementation ahead of Diwali.
Speaking at an event after inaugurating two expressways, PM Modi said the upcoming GST reforms aim to simplify tax structures and benefit the poor, middle class, and businesses of all sizes. He emphasized that reforms under the GST framework are designed to make governance more efficient and business operations smoother.
Under the proposed structure, the current four GST slabs — nil, 5%, 12%, 18%, and 28% — would be replaced by two main slabs of 5% and 18%. A special top bracket of 40% is being introduced for demerit and sin goods such as tobacco, pan masala, and online gaming.
Nearly 99% of items currently taxed at 12% — including butter, fruit juices, and dry fruits — will move to the lower 5% slab. Similarly, about 90% of products in the 28% category, such as televisions, refrigerators, air conditioners, washing machines, and cement, will be shifted to the 18% slab.
The Prime Minister highlighted that the new tax system is intended to prevent frequent demands for rate tweaks and avoid the accumulation of input tax credit (ITC). While the move may cause short-term revenue loss, the Centre expects a boost in consumption to balance the impact.
The GST Council is expected to meet next month to deliberate and finalize the reform proposal.
PM Modi described the changes as a “double bonus” for citizens this Diwali, stating: “For us, reform means continuous improvement. These GST reforms will make life and business easier, while boosting celebrations for the people.”
