GST Reforms Proposed by Central Government – Focus on Structural Reforms, Rate Rationalisation & Ease of Living
Date:15 August 2025
Source: Ministry of Finance, PIB Delhi
On the 79th Independence Day, Prime Minister Narendra Modi highlighted the role of Goods and Services Tax (GST) in benefiting the nation since its implementation in 2017, and announced the next generation of reforms to further strengthen the system.
Objective:
Support Atmanirbhar Bharat by making GST simpler, fairer, and more growth-oriented through three main pillars of reform.
Three Pillars of Proposed GST Reforms
1. Structural Reforms
- Correct inverted duty structures to align input/output tax rates and reduce unutilised input tax credit, boosting domestic value addition.
- Resolve classification issues to reduce disputes, simplify compliance, and ensure equity.
- Provide stability and predictability in tax policy to improve business planning and industry confidence.
2. Rate Rationalisation
- Reduce taxes on essential and aspirational goods to boost affordability and consumption.
- Move towards 2 main tax slabs — standard and merit — with special rates for a few items.
- Use the end of compensation cess to create fiscal space for stable long-term GST rates.
3. Ease of Living / Ease of Doing Business
- Enable seamless, technology-driven, time-bound registration for small businesses and startups.
- Introduce pre-filled GST returns to reduce manual errors and mismatches.
- Implement faster, automated refunds for exporters and sectors facing inverted duties.
Implementation Approach:
The Centre’s proposal has been sent to the Group of Ministers (GoM) for discussion.
- Government aims to build consensus with States under cooperative federalism.
- The GST Council will deliberate on GoM’s recommendations for early rollout, ideally within the current financial year.
Goal:
Transform GST into a simple, stable, transparent tax system that strengthens the formal economy, promotes inclusive growth, and enhances ease of doing business.