In his 79th Independence Day speech, Prime Minister Narendra Modi called for a new era of GST reforms, building on the 2017 implementation. The Central Government has since proposed a major overhaul, introducing a simplified two-slab GST structure—a standard rate and a merit rate—with special rates reserved only for a select few items. This proposal is now with the GST Council’s Group of Ministers (GoM).
The reforms are built on three main pillars:
- Structural Reforms: To fix issues like inverted duty structures, reduce litigation from classification disputes, and ensure long-term rate stability.
- Rate Rationalization: To lower taxes on essential and aspirational goods, implement the new two-slab system, and use the fiscal space from the end of the compensation cess for sustainable rates.
- Ease of Living: To simplify the process for everyone with seamless, tech-driven registration, pre-filled returns, and faster automated refunds for exporters and businesses affected by inverted duty structures.
These changes aim to simplify compliance, improve the ease of doing business, and boost domestic value addition. The government plans to work with states to build consensus, with the goal of implementing the changes within the current financial year.