Prime Minister Narendra Modi on Friday announced a "double Diwali" bonanza for the people of India, saying that next generation of Goods & Services Tax (GST) reforms will be rolled out by October this year.
In his address to the nation on Independence Day, the Prime Minister said that the GST rationalisation will help lower the cost of daily essentials and benefit the MSMEs.
"We have reduced the tax burden in the country over the last 8 years. We made taxation easier," PM Modi said during his address, adding that this Diwali, the government will bring next generation of GST reforms.
The Prime Minister said that the rationalisation will help lower tax rates and boost the economy.
The GST Council, headed by finance minister Nirmala Sitharaman and comprising her state counterparts, in September 2021, set up a group of ministers (GoM) to rationalise GST rates and suggest changes in slabs.
The GST rate rationalisation has been on the agenda for several months, with the focus on consolidation of the middle slabs, reduction in rates for essentials and broader structural changes to the tax regime.
The implementation of GST replaced a maze of indirect taxes with a single, unified system. It made tax compliance easier, reduced costs for businesses, and allowed goods to move freely across states. By improving transparency and efficiency, GST helped lay the foundation for a stronger, more integrated economy.
On 1 July 2025, the Goods and Services Tax (GST) completed eight years since its rollout on July 1, 2017.
The current GST structure consists of four main rate slabs: 5 per cent, 12 per cent, 18 per cent and 28 per cent. These rates apply to most goods and services across the country.
In addition to the main slabs, there are three special rates: 3 per cent on gold, silver, diamond and jewellery, 1.5 per cent on cut and polished diamonds and 0.25 per cent on rough diamonds. A GST Compensation Cess is also levied on select goods such as tobacco products, aerated drinks and motor vehicles at varying rates. This cess is used to compensate states for any revenue loss resulting from the transition to the GST system.
(With inputs from agencies)
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