Sitharaman to unveil next-gen GST reforms Aug 20.
PM Modi, in his Independence Day address, promised a Diwali gift for citizens through GST reforms aimed at reducing tax rates, simplifying compliance, and ensuring greater benefits for the common man.
New Delhi: Finance Minister Nirmala Sitharaman is set to participate in a key two-day meeting of a Group of Ministers (GoM) beginning August 20, where the Centre will present its ambitious proposal for far-reaching GST reforms. The meeting, scheduled for August 20–21 in the capital, is expected to deliberate on sweeping changes aimed at simplifying the Goods and Services Tax structure, slashing rates, and making everyday essentials more affordable for the common man.
According to sources, the Centre’s proposal revolves around reducing the current multiple GST slabs to just two — 5% and 18% — along with a special 40% slab for a Currently, GST is levied at 5%, 12%, 18%, and 28%, with luxury and sin goods attracting an additional cess. Food and essentials fall under the nil or 5% bracket, while most other items are distributed across the higher slabs, creating complexity for businesses and consumers alike.
“The idea is to present the Centre’s perspective behind the GST reforms. senior official explained.
Apart from the GoM on rate rationalisation, the two-day deliberations will also include discussions with panels on compensation cess as well as health and life insurance. Both areas have been high on the reform agenda, particularly with suggestions of tweaking tax rates on insurance premiums to make coverage more affordable for the middle class.
The timing of the reforms is also significant. The levy period for GST compensation cess is nearing its end, and industries have long complained about the problem of duty inversion, where taxes on inputs are higher than on finished products. The proposed rationalisation aims to address these structural inefficiencies while also making compliance easier for MSMEs and the farm sector.
Bihar Deputy Chief Minister Samrat Choudhary, who is the convenor of the GoM on rate rationalisation and health and life insurance, will chair the discussions. Minister of State for Finance Pankaj Chaudhary heads the GoM on compensation cess. Together, their inputs will shape the final recommendations to be taken up by the GST Council in its next meeting.
The Centre has pitched the reform as a move to ease the tax burden on citizens and businesses alike. By classifying items into just two broad categories — ‘merit’ goods at 5% and ‘standard’ goods at 18% — the government hopes to simplify compliance, remove ambiguities, and create a more predictable tax environment.
Prime Minister Narendra Modi, in his Independence Day address, had already promised citizens a Diwali gift in the form of these GST reforms. Soon after, the finance ministry unveiled its vision of a “next-generation” GST framework, built on three key pillars: structural reforms, rationalised rates, and ease of compliance.
For millions of households and small businesses, the outcome of this weekend’s meeting may well determine how much lighter their tax burden will be in the coming festive season.