Prime Minister Narendra Modi, in his 79th Independence Day address from the Red Fort, announced a major overhaul of the Goods and Services Tax (GST), promising a next-generation reform with lower rates by Deepawali. The move is aimed at reducing taxes on everyday items, supporting MSMEs, and boosting economic growth.
In his 12th consecutive I-Day speech, PM Modi unveiled plans for a sweeping overhaul of India’s GST system, describing it as a “great Deepawali gift” for citizens.
“I am going to give a great gift this Diwali. Over the past eight years, we implemented a major GST reform and simplified taxes. Now, the time has come for a review. We have conducted it, consulted with states, and are set to introduce a ‘next-generation GST reform’,” PM Modi declared from the Red Fort.
#BREAKING | From Red Fort, PM Narendra Modi announces a Next Generation GST reform coming this Diwali.
GST on daily-use items will be significantly lowered, promising major relief to consumers and boosting affordability across the country. pic.twitter.com/ZMpdlp2ZBc
— Organiser Weekly (@eOrganiser) August 15, 2025
Currently, GST in India is levied under five main slabs, ranging from 0 percent to 28 per cent, with 12 per cent and 18 per cent serving as standard rates for a wide array of goods and services. Approximately 21 percent of goods fall under the 5 percent slab, 19 per cent under 12 percent, and 44 percent under 18 percent.
Reportedly, the government is considering eliminating the 12 per cent category and redistributing these goods between the 5 per cent and 18 percent slabs, though final decisions are pending.
“This Diwali, taxes on essential services for individuals will be reduced substantially. MSMEs will benefit, daily need products will become cheaper, and the overall economy will get a boost,” the Prime Minister added.
While lower GST rates may initially reduce government revenue, the expected increase in sales volumes and improved compliance due to a simpler tax structure could offset these losses. The proposed reform is seen as a critical step to stimulate consumption and provide fresh momentum to India’s economy, particularly amid global trade uncertainties and tariff-related disruptions.
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