79th Independence Day: PM Modi unveils vision for next-generation GST reforms to boost relief, simplification and economic growth

On the occasion of India’s 79th Independence Day, Prime Minister Narendra Modi underscored the transformative role of the Goods and Services Tax (GST), introduced in 2017, calling it a landmark reform that has benefited the nation. He also emphasised the need for the “next generation” of GST reforms aimed at easing the burden on the common man, farmers, middle class, and MSMEs, while driving India closer to the vision of an ‘Atmanirbhar Bharat’.

The Ministry of Finance announced that the Central Government has submitted a detailed proposal on GST rate rationalisation and structural reforms to the Group of Ministers (GoM) constituted by the GST Council. The proposed reforms rest on three core pillars — structural reforms, rate rationalisation, and ease of living — with the objective of creating a simpler, more stable, and transparent tax regime.

Pillar 1: Structural Reforms

Inverted Duty Structure Correction: Align input and output tax rates to reduce accumulation of input tax credit, thereby encouraging domestic value addition.

Resolving Classification Issues: Streamline rate structures to minimise disputes, simplify compliance, and ensure fairness across sectors.

Stability and Predictability: Provide long-term clarity on rates and policy direction to boost industry confidence and enable better business planning.

Pillar 2: Rate Rationalisation

Lower Taxes on Essential and Aspirational Goods: Enhance affordability, boost consumption, and make key goods more accessible.

Reduced Slabs: Move towards a simpler GST structure with two primary slabs — standard and merit — with special rates for select items only.

Leverage Fiscal Space: Use the end of compensation cess to provide greater flexibility in aligning tax rates for long-term sustainability.

Prime Minister Shri @narendramodi, on the occasion of 79th Independence Day, highlighted how Goods and Services Tax (GST), implemented in 2017, is a significant reform which has benefited the nation.

The Prime Minister underscored the importance of the next generation of reforms…

— Ministry of Finance (@FinMinIndia) August 15, 2025

Pillar 3: Ease of Living

Seamless Registration: Technology-driven, time-bound processes for small businesses and startups.

Pre-Filled Returns: Reduce manual interventions, eliminate mismatches, and ease compliance.

Automated Refunds: Speed up refund processing for exporters and sectors with inverted duty structures.

The government aims to implement these reforms through a cooperative federal approach, working closely with states to achieve consensus. The GST Council is expected to deliberate on the GoM’s recommendations in its upcoming meeting, with the goal of initiating reforms within the current financial year.

Reaffirming its commitment, the Centre stated that the vision is to evolve GST into a “simple, stable, and transparent tax system” that drives inclusive growth, strengthens the formal economy, and enhances ease of doing business across the country.