During his Independence Day speech, Prime Minister Narendra Modi announced that “next generation GST” reforms will be unveiled by Diwali. He stated that these reforms are a “Diwali gift” for the citizens and are aimed at making many everyday products cheaper.

The reforms are expected to provide substantial tax relief to the common person and benefit small and medium enterprises (MSMEs). The government has been consulting with states on these changes, which are a review of the GST system implemented eight years ago.

While the specifics are still to be officially announced, reports suggest that the government is considering a major restructuring of the tax slabs. This could include the potential removal of the 12% slab, with many essential items possibly being shifted to the 5% category. This move is anticipated to not only ease inflationary pressures but also boost consumption, thereby strengthening the economy. A task force is also being set up to recommend further GST reforms in a time-bound manner.