'Ek baar aap GST dekh lo': PM's nudge ushered in biggest GST reform in 8 yrs
GST
Dated:- 7-9-2025
PTI
New Delhi, Sep 7 (PTI) 'Ek baar aap GST dekh lo!' – Prime Minister Narendra Modi's gentle nudge to Finance Minister Nirmala Sitharaman in December last year sparked the beginning of a mammoth exercise to overhaul the tangled goods and services tax regime. And the final outcome is a significantly simplified system with lower tax rates and easier compliance for businesses.
Sitharaman, who, along with her team, began work to identify anomalies in the present four-tier structure and compliance issues faced by businesses, was once again reminded by the Prime Minister when she was preparing the Budget for the 2025-26 fiscal year. 'Aap GST ke upar kar rahi ho na kaam?' Modi had inquired.
Her discussion with the Prime Minister led Sitharaman to begin work on reviewing everything in GST – not just rates and tax slabs but how to make the regime more friendly for businesses, parti
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e for us, now that eight years are over, to have a thorough review of everything in GST, not just the rates, not just the number of slabs, but also looking at it from the point of view of how will a business, small or medium business approach this,” she said.
Classification issues – such as different tax rates on salted and caramel popcorn and cream buns being taxed at higher rates while buns and cream separately attracting much lower taxes – and the rates were reviewed.
“So since February 1, 2025, till about May 15 we kept doing this study, review and so on,” she said.
“Sometime in mid-May, when I was through with the first cut, I went to the Prime Minister (and) told him we are somewhere near some formulation, which can be a proposal and asked him to give me time so that I can brief him. He gave me time. I briefed him.” The final decision on changes in the GST rested with the GST Council, which is headed by the Union Finance Minister and includes representatives of all states
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nataka chief minister Basavaraj Somappa Bommai and was later headed by Bihar Deputy Chief Minister Samrat Chaudhary, went through the Centre's proposal.
The GoM backed the proposal to scrap 12 per cent and 28 per cent GST slabs and have just two – 5 per cent for common use goods and 18 per cent for everything else. A third rate of 40 per cent has been earmarked for a small list of sin goods and ultra-luxury items.
“Then (GoM) they came to a decision that it is better this whole thing is placed in the Council itself, rather than for them to further go into the proposal. Then all this came to the Council, and the Council took a decision on September 3 on lines of the Centre's proposal,” she said.
Sitharaman called the landmark GST overhaul a “people's reform” that will benefit every family, boost consumption, and bolster the economy. All 140 crore people will be touched by this landmark reform directly or indirectly, she said.
Nearly 400 products – from soaps to cars, shampoos to
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