Next-Generation GST Reform: Two-Slab Plan Announced
Why in the news
In his Independence Day address the Prime Minister unveiled simpler GST rates meant to ease the load on citizens and support growth.
Key facts
- Rollout target: Diwali 2025.
- 5% for merit and essential goods; 18% for standard goods and services.
- 40% special rate for 7 items such as tobacco, alcohol, pan masala and online betting.
- Zero rate continues for essential foods; labour-intensive exports such as diamonds keep present rates.
| Current slab | Proposed |
|---|---|
| 12% | About 99% of items move to 5% |
| 28% | About 90% of items move to 18% |
Objectives
- Lower burden on essential and standard goods; lift demand.
- Easier compliance for MSMEs.
- A predictable regime for long-term growth.
Exam angle
- Announced on: 79th Independence Day.
- Approval route: states and GoM, then GST Council.