In a landmark Independence Day address from the Red Fort, Prime Minister Narendra Modi announced sweeping reforms to India’s Goods and Services Tax (GST) regime, promising substantial tax relief for consumers and small businesses ahead of Diwali. Framing the move as a “double Diwali” gift, Modi said the next-generation GST overhaul will simplify compliance, reduce rates on daily-use items, and boost economic momentum.
Key Highlights of the Announcement
- Tax Cuts on Essentials: Items currently taxed at 12% may be reassigned to either the 5% or 18% slabs, making daily-use goods significantly cheaper.
- Support for MSMEs: The reforms aim to ease compliance and reduce costs for micro, small, and medium enterprises, enhancing their competitiveness.
- Simplified GST Structure: The government is considering eliminating the 12% slab entirely, streamlining the rate system for better transparency and efficiency.
- Upcoming GST Council Meeting: The 56th GST Council session, scheduled for September 9, is expected to finalize rate rationalization and compliance restructuring.
A “Double Diwali” for India
“This Diwali, I am going to make it a double Diwali for you,” Modi declared, emphasizing that the reforms are designed to empower consumers and entrepreneurs alike. He highlighted the eight-year journey of GST since its rollout in 2017 and said the time was ripe for a comprehensive review.
The Prime Minister also linked the reforms to India’s broader economic vision, citing the success of UPI and the rise of self-reliance in digital transactions. “Lower taxes mean stronger purchasing power for families and a boost for our economy,” he said.
Economic Implications
Market analysts expect a positive reaction on Dalal Street, especially in consumption-driven sectors. The reforms could also align with upcoming free trade agreements, removing barriers for domestic industries and enhancing India’s global competitiveness.
