The Central Government has proposed moving to a simplified two-slab Goods and Services Tax (GST) structure — standard and merit — with special rates reserved only for select items. The proposal, sent to the Group of Ministers (GoM) set up by the GST Council, is part of a broader plan for next-generation GST reforms.Prime Minister Narendra Modi, in his 79th Independence Day speech, said GST, implemented in 2017, has been a major reform for the nation and stressed the need for changes that benefit the common man, farmers, middle class, and MSMEs.The reform plan rests on three pillars — structural reforms, rate rationalisation, and ease of living.
Structural reforms will focus on correcting inverted duty structures to cut input tax credit accumulation, resolving classification disputes to reduce litigation, and ensuring long-term rate stability.Rate rationalisation includes reducing taxes on essential and aspirational goods, shifting to the proposed two-slab system, and using fiscal space created by the end of the compensation cess to align rates for sustainability.Ease of living measures involve seamless, technology-driven GST registration, pre-filled returns to minimise mismatches, and faster automated refunds for exporters and businesses affected by inverted duty structures.The Centre said the reforms aim to simplify compliance, enhance ease of doing business, strengthen economic sectors, and boost domestic value addition. It will work with states to build consensus before the GST Council considers the GoM’s recommendations, with an objective to implement the changes within the current financial year.First Published: Aug 15, 2025 11:00 AM IST
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