Big GST Shake Up: What Sitharaman’s New Rates Mean for You?
Govt announces major GST cuts to benefit farmers, middle class, and small businesses.
Union Finance Minister Nirmala Sitharaman announced a transformative overhaul of the Goods and Services Tax (GST) system during a Group of Ministers (GoM) meeting in Delhi on Wednesday, emphasizing relief for farmers, the middle class, and small enterprises.
The proposed restructuring, which reduces GST rates primarily to two slabs of 5% and 18%, with a high 40% slab for 5-7 luxury items, aims to streamline taxation and enhance ease of living. This initiative, first highlighted by Prime Minister Narendra Modi in his Independence Day address, is set to roll out by Diwali in October 2025.
In her 20-minute address to state representatives, Sitharaman outlined the “next-generation GST” framework, built on structural reforms, rate rationalization, and improved quality of life. The current GST structure, with slabs at 5%, 12%, 18%, and 28% plus cess for luxury goods, will be simplified to make essentials more affordable while maintaining higher taxes on select luxury items.
The GoM meetings, spanning two days, are focused on rate rationalization, insurance taxation, and compensation cess, with proposals slated for review by the GST Council, comprising Central and state ministers, in September.
The finance ministry emphasized its commitment to “cooperative federalism,” aiming to forge a consensus with states in the coming weeks. “The Central Government remains dedicated to implementing these reforms to benefit all stakeholders,” the ministry stated in a post on X.
The rejig is expected to reduce financial burdens on essential goods and services, directly supporting small businesses and rural communities. With a clear timeline and broad-based consultation, the GST reforms signal a pivotal step toward economic inclusivity and efficiency in India’s taxation system.
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