New GST Structure:

The Goods and Services Tax (GST) in India is undergoing significant changes, aimed at providing relief to common citizens and businesses. Prime Minister Narendra Modi, in his Independence Day speech, announced a revamped GST structure. The government will introduce it by Diwali 2025.The goal is to make daily-use items more affordable, benefiting both consumers and small businesses.

New GST Structure:

Currently, the GST system has multiple slabs, ranging from 5% to 28%. Under the new proposal, the government will introduce two primary rates of 5% and 18%, along with a special 40% rate for luxury goods. The government will shift many items from the 12% GST slab to the 5% rate. It will also reduce items in the 28% slab to 18%. This change will simplify the system and make essential goods more affordable. This will simplify the system and make essential products like food and household goods cheaper.

Tobacco products will see a higher GST of 40%, maintaining the current total tax incidence. However, petroleum products will remain outside the GST structure for now. These changes are expected to boost consumption and help businesses, particularly small and medium-sized enterprises (SMEs), by lowering tax burdens.

The government believes that these reforms will not only benefit consumers but also strengthen India’s economy. The new GST structure aims to make India more self-reliant, while offering citizens a significant economic relief as a gift during Diwali. This reform is part of broader economic changes aimed at modernizing India’s tax system and preparing it for future growth.

The revamped GST system promises to make essential goods more affordable, enhance ease of doing business, and contribute to India’s growth as a robust economy.

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