On the occasion of the 79th Independence Day, Prime Minister Narendra Modi, in his address from the Red Fort on 15th August 2025, announced a major shift in India’s indirect tax regime by introducing Next Generation GST Reforms, describing them as a “Diwali gift” to the people of India. The proposed reforms are expected to rationalize the current multi-slab GST structure into a more simplified two-rate system of 5% and 18%, with the elimination of the 12% and 28% slabs for most goods. This structural change is intended to ease compliance, promote transparency, and reduce the effective tax burden on both consumers and businesses.
The reform is anticipated to bring immediate relief to households by lowering the prices of several essential and consumer-oriented goods such as butter, fruit juices, dry fruits, small cars, and televisions, while also addressing long-standing concerns of MSMEs, traders, and startups regarding procedural complexities and delayed refunds. The government has highlighted that the changes are designed to support ease of doing business, strengthen consumption demand, and enhance tax compliance efficiency across sectors.
Industry stakeholders, particularly from hospitality, tourism, and manufacturing, have welcomed the announcement, noting that GST rationalisation will improve competitiveness and stimulate growth. The GST Council is scheduled to meet on 3–4 September 2025 to deliberate on the reform blueprint, after which the revised rates are expected to be rolled out ahead of Diwali. Financial markets and global rating agencies have also responded positively, viewing this tax reform as a catalyst for growth and fiscal stability.
By aligning economic policy with festive sentiment, the government has strategically positioned these reforms as both symbolic and substantive. For tax professionals, businesses, and policy analysts, this reform marks a critical milestone in India’s indirect tax framework, reflecting the ongoing journey towards a simpler, efficient, and citizen-centric GST regime.