PM Modi promises big bang GST reform by Diwali, price cuts on everyday items
GST
Dated:- 15-8-2025
PTI
New Delhi, Aug 15 (PTI) Prime Minister Narendra Modi on Friday announced plans for big bang reforms in the GST regime by Diwali, which will bring down prices of everyday items, as his government looks to overhaul the eight-year-old tax structure plagued by compliance issues, evasions and litigation.
The present GST tax rates of nil/zero on essential food items, 5 per cent on daily use products, 12 per cent on standard goods, 18 per cent on electronics and services and 28 per cent on luxury and sin goods will be replaced by by a two tax slabs of 5 per cent and 18 per cent plus a special 40 per cent top bracket for 5-7 demerit goods.
While essential food items, medicines and education will continue to be taxed at zero rate in the proposed revamped goods and services tax (GST) regime, 99 per cent of items in the current 12 per cent slab will move to the 5 per cent bracket.
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troleum products, such as petrol, diesel, natural gas, ATF and crude oil, will continue to remain outside the GST, as they remain a major source of revenue for states.
When GST was implemented from July 1, 2017, it subsumed central levies like excise duty and service tax and state taxes like VAT into one levy. However, petroleum products, for the time being, and alcohol were kept out of it.
“This Diwali, I am going to make it a double Diwali for you,” Modi said in his address.
Stating that over the past eight years, his government has undertaken major GST reforms, the Prime Minister said, “We have discussed with states and we are bringing next-generation GST reforms that will reduce the tax burden across the country”.
“Tax on items for the common man will be reduced substantially. Our MSMEs will benefit hugely. Daily use items will become cheaper, which will also strengthen our economy,” he said.
Soon after the Prime Minister's address, the Union Finance Ministry, in a statement,
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ce the GoM vets it, it would go to the GST Council, headed by the Union Finance Minister and comprising representatives of all states, for a final implementation decision sometime in September.
The revamp may lead to a loss of revenue, which currently stands around Rs 2.10 lakh crore a month, but a boost to consumption and the economy is likely to recoup it in a matter of “a few months”, sources said.
Inverted duty structure in sectors like textiles and fertiliser will be addressed.
Once the revamped regime is implemented, the cess that is charged on luxury and sin goods on top of the highest 28 per cent rate will immediately end. The cess was initially levied to compensate states for the loss of revenue in the first five years of implementation of GST. It continued thereafter as the money borrowed to pay for the compensation had to be repaid. That repayment and revamp will coincide, sources said.
On structural reforms, the finance ministry said the inverted duty structure needs to
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