Prime Minister Narendra Modi has called upon states to collaborate in implementing the proposed Goods and Services Tax (GST) reforms, emphasizing the potential benefits for the poor, middle class, and businesses. Modi highlighted that the central government has already circulated the draft of the next-generation GST reforms among the states, seeking their cooperation to ensure its implementation before Diwali.

The Prime Minister underlined the government's commitment to simplifying the GST law and revising tax rates. The proposed reforms aim to create a more streamlined and transparent tax system, reducing the tax burden across the country. The changes are expected to boost domestic consumption and demand, particularly for Micro, Small, and Medium Enterprises (MSMEs).

The proposed GST reforms include a shift to a two-rate structure, with the elimination of the 12% and 28% slabs. Under the new structure, most goods from the 12% slab would move to the 5% slab, and about 90% of items from the 28% slab would be shifted to the 18% slab. Luxury and sin goods may face a special rate of 40%, applying to a limited number of products like tobacco. Online gaming is also expected to be treated as a demerit category and taxed at the highest rate. Essential food items would continue to be taxed at a nil or 0% rate, while everyday goods would be taxed at 5%.

The Finance Ministry has already sent its recommendations regarding GST rate rationalization and reforms to the Group of Ministers (GoM) for further examination. The GST Council is expected to meet next month to discuss these reforms.

Experts believe that the proposed GST reforms are a timely and strategic move to build a resilient Indian economy. The rationalization of GST rates is expected to make exports more competitive and boost domestic consumption. It is also expected to benefit small traders, MSMEs, and the retail sector.

Industry leaders have praised the Prime Minister's announcement of GST reforms. They believe that the simplification of the tax structure and the reduction in tax rates will stimulate demand and put more money in the hands of consumers.

The government has reaffirmed its commitment to evolving the GST into a simple, stable, and transparent tax system. The proposed reforms are aimed at reducing litigation and evasions, which have plagued the eight-year-old tax regime. The Centre expects that these reforms will lead to a double bonus for citizens this Diwali.