Big Diwali Bonanza: GST Reforms Are Coming

Prime Minister Narendra Modi has promised a major tax relief (GST) for the common man and small businesses by Diwali. Speaking from the Red Fort on Independence Day, Modi said the government is rolling out next-generation GST reforms aimed at simplifying the tax system and reducing the burden on daily-use items. “We’re making it a double Diwali this year,” Modi said, highlighting plans to overhaul the Goods and Services Tax (GST) structure after eight years of implementation.

GST : Lower Taxes, Simpler Rates

Key proposals include:

• Scrapping the 12% GST slab, with goods shifting to 5% or 18%.
• Rate cuts on food delivery, health insurance, bicycles, and packaged water.
• MSMEs are expected to benefit significantly from reduced tax compliance and costs.
• Officials say over 150 items are under review for potential rate changes.
• High-End Goods May Get Costlier

To offset revenue loss, luxury items like expensive wristwatches, shoes, and garments could face higher taxes. Items priced above ₹25,000 may move to the highest 28% GST slab. The government is also considering discussions on bringing aviation turbine fuel (ATF) into the GST regime and reevaluating compensation cess on sin goods like tobacco.

Council Crunch Time Ahead

Multiple meetings of the Council will take place before Diwali. States are concerned about potential revenue losses are estimated at ₹70,000–80,000 crore from the proposed rate cuts. Consensus building has already begun, with Union Home Minister Amit Shah engaging with state leaders to resolve concerns.

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Relief vs. Revenue: The Balancing Act

The proposed reforms aim to simplify India’s complex GST structure and bring relief to consumers ahead of the festive season. However, the challenge lies in balancing tax relief with state revenue needs and whether politics will allow it in time for Diwali remains to be seen.

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