Representative picture | Photo Credit: Getty Images/Istockphoto
The new GST regime, introduced by Prime Minister Narendra Modi at his Independence Day, would focus on consumers, with special emphasis on the poor, MSmes, middle class and farmers, they said on Sunday at higher government sources.
The new two -stage structure of the tax on goods and services (GST) in the amount of 18% and 5% of the rate will have the twin goal to make rates and processes easier and more rational, as originally intended, said sources.
“Fairer taxation”
“This has been produced for some time. Our teachings will get into it for the last eight years, and this will be a major change in the taxation template,” one manager said. “The new GST regime will cause our taxation to be fairer and see reduced taxes on what these four categories consume. The template will be more likely to be explained and explained.”
The Center expects any reduction in income that could soon be balanced by a new buoyancy in the economy, which is expected to rationalize rates and simplify the process. “Reduced rates do not lead to reduced income and we expect compliance and collection to increase,” the official said, adding that the upcoming tax regime would be “fiscal sustainable”.
Most items at 28% of the GST rate will move to 18% and “several” will go to 40%, which will apply to exceptional items called “Sin Goods”, sources said.
“Revenue may fall in a very short term, but we expect that change of consumption and easy compliance will replace the regulations. It will therefore be a relatively fiscal sustainable exercise,” the source said.
Deepavali the term
The Center expects states to be on board with proposals in time for Deepavali – October 20 – the deadline that has set them to move them. In a press release after the Prime Minister’s speech, the Ministry of Finance stated that the Center would cooperate with state governments in the coming weeks, at the next meeting of the GST Council.
Two groups of ministers (composed of state governments) – one about rationalization of rates and the other to remunerate – will have to approve details before they go to the GST Council. GST was a permanent topic of conflict between opposition states and the center, but it does not expect resistance to its proposals for revision.
“The concerns about any potential losses of income are not their (opposition states eligible) themselves to be dealt with. Center and states should all cooperate to expand income using this occasion.
They also added that since the Center does not have GOM rationalization in GOM, if GOM decides to design the center, states would seem to decide to reduce taxes for an ordinary person.
Both Goms, followed by the GST Council, are expected to meet in the coming weeks. One source said that compensation would soon stop, before its legal end of 31 March 2026. Although it was originally set to stop in 2022, its time was then extended to repay the loan to compensate the states because the CESS collections were affected by the COVID-19 pandemic.
This loan will be repaid earlier. However, this also creates a problem for the center, because CESS also applies to hungry goods such as tobacco.
“If the stop is over, then it would significantly reduce the effective rate of tobacco tax, gutka and other sinful goods,” the source explained. “And that’s something that the center can’t do. That was another reason why Revam GST had to be done soon.”
According to sources, the fact that GST reforms take place in the middle of global uncertainties and customs threats of the United States is just by chance.
Published – August 17, 2025 22:28
