What are the key changes in India's GST reforms?

The Indian government plans to scrap the existing 12% and 28% GST slabs and move towards a two-slab structure, with almost 99% of items currently taxed at 12% shifting to a lower 5% bracket and around 90% of goods and services charged at 28% moving to an 18% slab.

What is the goal of India's GST overhaul?

The key objectives of the GST reforms are to simplify the tax structure, ease the burden on individuals and businesses, promote domestic value addition, and enhance the global competitiveness of Indian products.

Home / Business and Economy / India Unveils Sweeping GST Reforms to Boost Consumption and Growth

India Unveils Sweeping GST Reforms to Boost Consumption and Growth

Q: How will the GST reforms impact Indian consumers?

The reforms aim to significantly reduce the tax burden on essential and aspirational goods, thereby boosting consumption and strengthening the overall economy. Prime Minister Narendra Modi has described the upcoming changes as a "double Diwali" for the public.

16 Aug

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Summary

India plans to move to a two-slab GST structure
GST on essential items to be reduced substantially
Reforms aim to ease burden on individuals and businesses

India Unveils Sweeping GST Reforms to Boost Consumption and Growth

As of August 16, 2025, the Indian government is set to undertake a significant overhaul of the country's eight-year-old goods and services tax (GST) system. The proposed reforms, which are currently being discussed with state governments, aim to simplify the tax structure and provide relief to both individuals and businesses.

The key changes include scrapping the existing 12% and 28% GST slabs and moving towards a two-slab structure. Under the new system, almost 99% of items currently taxed at 12% will be shifted to a lower 5% bracket, while around 90% of goods and services charged at 28% will move to an 18% slab. Additionally, seven "sin" items, such as tobacco products, will be subject to a special 40% rate.

Prime Minister Narendra Modi has described the upcoming GST reforms as a "double Diwali" for the public, promising that the changes will significantly reduce the tax burden on essential and aspirational goods, thereby boosting consumption and strengthening the overall economy. The finance ministry has stated that the revamp will focus on three key pillars: rate rationalization, structural reforms, and ease of living for taxpayers.

Experts believe that the proposed GST overhaul, if implemented with clarity and consensus, has the potential to become a catalyst for India's future growth and competitiveness. The reforms are expected to ease compliance challenges, promote domestic value addition, and enhance the global appeal of Indian products.

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