After Prime Minister Narendra Modi's announcement to roll out GST reforms by Diwali, the Finance Ministry has suggested a new GST structure to the GoM that will have two-slab tax rates and special rates for certain items.
The Finance Ministry on Friday said it has recommended a new GST structure to a Group of Ministers (GoM), which will have two-slab tax rates and also special rates for certain items.
Prime Minister Narendra Modi announced on the 79th Independence Day that the GST reforms will be implemented by Diwali. This will reduce the tax burden and benefit small industries. After the PM's announcement, the Finance Ministry said that the proposal given to the GoM is based on three things. First is improving the structure, second is simplifying the tax rates and third is making people's lives easier. The proposal talks about reducing taxes on things needed by the common people and ambitious things. There is a suggestion to reduce the slab to two levels, standard and merit. Special rates will be applicable only on selected things.
Currently there are 4 GST slabs
Currently, there are 4 slabs of GST, which have rates of 5%, 12%, 18% and 28%. The GST Council headed by Finance Minister Nirmala Sitharaman will meet in September, in which the proposal of the GoM will be discussed. The ministry says that the end of compensation cess has given more flexibility to the government, which will help in simplifying and stabilizing the tax rates.
Prime Minister Shri @narendramodi, on the occasion of 79th Independence Day, highlighted how Goods and Services Tax (GST), implemented in 2017, is a significant reform which has benefited the nation.
The Prime Minister underscored the importance of the next generation of reforms
— Ministry of Finance (@FinMinIndia) August 15, 2025
What is the benefit to industry and business?
The new GST system will correct the inverted duty structure, reduce disputes over tax classification and make business planning easier due to stability in rates. MSME and startups will get the facility of online registration and pre-filled returns, which will save their time and money. Exporters will benefit from automated refund process.
What is the impact on revenue and economy?
In 2024-25, GST collection reached a record level of Rs 22.08 lakh crore with a growth of 9.4%. The government says that the new reforms will increase consumption, accelerate economic activity and give more speed to formalization in the country. This will boost both revenue and economy.
