Prime Minister Narendra Modi, in his Independence Day address, announced the launch of “next-generation GST reforms.” These changes are expected to simplify the current Goods and Services Tax structure and provide relief to consumers by Diwali 2025.
A Simplified GST Structure
The government is set to introduce a three-slab GST system to replace the existing complex structure. The new slabs will be:
- 5%
- 18%
- 40% (Sin Goods category)
This change will streamline taxation, making it easier for businesses and consumers to understand.
Currently, goods taxed at 12% are likely to move down to 5%, while those under the 28% slab are expected to shift to 18%. This re-categorization is aimed at boosting demand and reducing the burden on everyday essentials.
Introduction of a “Sin Goods” Slab
A new 40% GST slab will be introduced, specifically targeting items classified as “sin goods.” These include:
- Tobacco products such as cigarettes
- Beer and other similar items
The idea behind this move is to discourage consumption of such products while also generating higher revenue for the government.
What May Get Cheaper?
If the proposed reforms are approved, a wide range of goods could see significant price reductions. Items expected to benefit from the shift from 12% to 5% include:
- Condensed milk
- Dried fruits
- Frozen vegetables
- Sausages
- Pasta
- Jams
- Namkeens (like bhujiya)
- Tooth powder
- Feeding bottles
- Carpets
- Umbrellas
- Bicycles
- Utensils
- Furniture
- Pencils
- Jute or cotton handbags
- Footwear priced under ₹1,000
For everyday households, this could mean more affordable groceries, stationery, furniture, and other essential items.
The Road Ahead
The Central Government has already forwarded the reform proposals to the Group of Ministers (GoM) tasked with GST rationalization. Once reviewed, the recommendations will go to the GST Council, chaired by Finance Minister Nirmala Sitharaman.
The Council will take the final call on whether to adopt, modify, or reject these changes. If approved, the reforms will be rolled out before Diwali 2025.
Conclusion
The upcoming GST reforms represent one of the most significant changes since the tax’s introduction in 2017. By reducing the number of slabs and easing the tax burden on essentials, the government aims to make the system more consumer-friendly. At the same time, the higher tax on “sin goods” ensures that the principle of social responsibility is maintained.
If implemented as proposed, these changes could bring cheer to households across India—just in time for the festive season.
