Modi Independence Day GST Announcement Signals Major Two-Slab Tax Reform

August 15, 2025 MTIMES 74 Views GST Council meeting, GST reform news, Independence Day speech, India tax reform, Indian economy update, Modi Independence Day GST announcement, two-slab GST proposal 3 min read

The government has proposed a significant restructuring of the Goods and Services Tax (GST) framework by scrapping the current 12% and 28% tax slabs as part of a broader move toward a two-slab system, according to sources familiar with the ongoing discussions. Under the proposal, around 99% of items currently taxed at 12% are likely to be shifted to the 5% slab, while most of the goods that fall under the existing 28% slab — including white goods — may be moved to the 18% slab.

Officials noted that the proposal is still in its initial stage and will be debated with all state representatives in the upcoming GST Council meeting. A senior government source clarified that the proposal is not linked to U.S. tariff changes or international geopolitical developments, but rather part of a larger effort to simplify the current multi-rate GST structure.

Modi Independence Day Gst Announcement Sparks Discussion On Two-Slab Structure

The Centre is reportedly examining all prevailing GST-related issues in a comprehensive manner and intends to introduce a full reform package at the next GST Council gathering. According to sources, the proposed shift toward a two-slab GST system aims to streamline taxation, reduce administrative complexity and provide relief to a wide range of stakeholders, including small businesses and households

The proposal to eliminate the 12% and 28% slabs reflects the government’s broader vision of driving tax efficiency and improving compliance. Officials emphasized that a final decision will only be taken after detailed discussions with all member states, as the GST regime is based on consensus.

The development comes shortly after Prime Minister Narendra Modi, in his address to the nation on the occasion of the 79th Independence Day, announced a major overhaul of the GST regime. Calling the GST one of the most important reforms since its introduction in 2017, the Prime Minister underscored the need for next-generation reforms to ensure that the tax system offers tangible benefits to the common man, farmers, the middle class and Micro, Small and Medium Enterprises (MSMEs).

He added that the new direction for GST would focus on simplifying the tax structure, reducing compliance burden and making the regime more people-centric. The shift toward the proposed two-slab system is widely viewed as a step in that direction.

(The content is sourced from agencies and has not been edited by mtimes.co.in.)

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