Prime Minister Narendra Modi on Friday announced that this year’s Diwali will come with “next-generation GST reforms” aimed at reducing the tax burden on the common man. Speaking from the ramparts of the Red Fort during the 79th Independence Day celebrations, the Prime Minister said the reforms would lower taxes on daily-use items and strengthen the economy.
“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,” Modi said. He also revealed that a task force will be set up to suggest ways for comprehensive reforms beyond GST.
Later, the Finance Ministry released the blueprint of the proposed GST reforms, built on three pillars — structural reforms, rate rationalisation, and ease of living. The Centre has submitted its proposals to the Group of Ministers (GoM) constituted by the GST Council for further examination.
Structural Reforms
The structural reforms will focus on:
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Inverted duty structure correction – Aligning input and output tax rates to reduce accumulation of input tax credit, thereby promoting domestic value addition.
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Resolving classification issues – Streamlining rate structures, minimising disputes, and ensuring greater equity across sectors.
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Stability and predictability – Offering long-term clarity on rates and policies to boost industry confidence and enable better business planning.
Rate Rationalisation
The government aims to simplify GST by moving towards a two-slab structure — standard and merit rates — with special rates only for select items. The end of the compensation cess has created fiscal space for such rationalisation.
Ease of Living
The reforms will focus on making GST processes seamless and technology-driven, especially for small businesses and start-ups. Key measures include faster and automated refunds, pre-filled returns to reduce manual errors, and simplified registration.
The Ministry said the reforms seek to cut classification-related disputes, correct inverted duty structures, stabilise rates, and enhance ease of doing business. These steps are expected to stimulate economic activity, strengthen key sectors, and support sectoral expansion.
The GST Council will take up the GoM’s recommendations in its next meeting, with the government aiming for early implementation within the current financial year.
