New Delhi: Prime Minister Narendra Modi announced on Sunday that the Central government has drafted a proposal for the next-generation Goods and Services Tax (GST) reforms and has sent it to the states. He sought the cooperation of state governments to implement the proposal before Diwali this year.

Speaking after inaugurating two new expressways in Delhi, Modi emphasised that these reforms would benefit not only the poor and middle class but also both small and large businesses.

Modi explained that the proposed changes in the GST law aim to simplify the system and adjust tax rates, which will benefit a wide range of people and businesses. “This is a major step toward making GST more accessible, especially for businesses and consumers,” he said. The Central government intends to introduce a simplified GST structure and will consider revising tax slabs to reduce the burden on various segments of society.

In his Independence Day speech on August 15, the PM had already announced plans for these changes, describing them as a step toward promoting good governance. “For us, reforms mean moving forward with good governance,” he had said earlier.

The Prime Minister reiterated that the government would focus on continuous reforms to make life easier for people and businesses alike. He added, “In the coming months, we are going to implement several major reforms, and this Diwali, people will get a double bonus from GST reforms.” The draft proposal for GST reforms has already been sent to the states, with the Central government hoping for their swift cooperation. Modi urged the states to complete the process promptly so that the changes could be implemented in time for the Diwali festival. The primary objectives of these reforms are to simplify the GST process and adjust tax rates to benefit a larger section of the population.

New GST slabs

The Union government has proposed a revised GST system that would streamline the existing tax structure into only two main tax slabs—5% and 18%. The proposal suggests eliminating the current 12% and 28% tax slabs. Additionally, a special 40% tax slab has been proposed for luxury and harmful goods. The new system aims to reduce tax complexity and ensure more efficient compliance.