He also announced the setting up of a task force to suggest ways for next-generation overall reforms.
“This Diwali, I am going to make it a double Diwali for you. This Diwali, you fellow countrymen are going to get a very big gift. In the last eight years, we have carried out a major reform of GST, reduced the tax burden across the country, simplified the tax regime, and now, after eight years, the need of the hour is to review it once again. We started the review by setting up a high-power committee and also held discussions with the states,” he said while addressing the nation from the ramparts of the Red Fort on the occasion of the 79th Independence Day celebration.
Blueprint of GST Reform
Later, in a social media post, the Finance Ministry shared the details of the upcoming GST reforms. “To build an ‘Atmanirbhar Bharat’, the Central Government is proposing significant reforms in GST. These will be focused on three pillars — structural reforms, rate rationalisation, and ease of living,” the Ministry said.
A detailed proposal has been sent to the Group of Ministers (GoM) constituted by the GST Council for examination, with a focus on rationalising tax rates to benefit all sections of society, particularly the common man, women, students, the middle class, and farmers. The planned measures aim to reduce classification-related disputes, correct inverted duty structures in select sectors, ensure greater rate stability, and further enhance ease of doing business. The government believes these initiatives will strengthen core economic sectors, stimulate activity, and enable sectoral expansion.
Under Pillar 1: Structural Reforms, the proposals include correcting inverted duty structures by aligning input and output tax rates to reduce input tax credit accumulation and promote domestic value addition. They also aim to resolve classification issues by streamlining rate structures to minimise disputes, simplify compliance, and ensure equity across sectors. Additionally, the reforms seek to provide long-term clarity on rates and policy direction to boost industry confidence and support better business planning.
Pillar 2: Rate Rationalisation focuses on reducing taxes on essential and aspirational goods to make them more affordable and boost consumption. The government plans to move towards a simplified two-slab GST structure — standard and merit — with special rates reserved for only a select few products. The fiscal space created by the end of the compensation cess will be used to rationalise and align tax rates sustainably.
Under Pillar 3: Ease of Living, the Centre proposes streamlined, technology-driven, and time-bound registration processes, especially for small businesses and startups. It also plans to introduce pre-filled returns to reduce manual errors and mismatches, alongside faster, automated refund systems for exporters and sectors impacted by inverted duty structures.
The Centre stated that the proposal is designed to promote an inclusive, consensus-based dialogue among stakeholders. In the spirit of cooperative federalism, it is committed to working closely with the States to build consensus and implement the reforms within the current financial year. The GST Council will deliberate on the GoM’s recommendations in its upcoming meeting, with efforts aimed at early implementation.
