How GST Revamp May Make Your Wallet Fatter

On the occasion of India's 79th Independence Day, Prime Minister Narendra Modi gave the nation a festive promise well ahead of the festival season—a "double Diwali bonanza" in the form of GST 2.0.

- MAYANK MOHANKA

Eight years after the launch of the indirect tax regime, the Prime Minister signaled that the next generation goods and services tax (GST) reforms are on the way. These could put more money in people's pockets, ease the burden on businesses, and inject fresh energy into the economy before the year ends.

The government's new blueprint, now being considered by a group of ministers (GoM), rests on three big goals: simplifying tax rates, fixing structural issues, and making life easier for both businesses and consumers. While these may sound like technical policy terms, they have a very real impact on everyday lives—from the price you pay for groceries to how quickly a small shopkeeper gets his tax refund.

GST rate rationalization is the first pillar of major reform actively being pursued by the GoM, signaling a clear intent to make the tax regime simpler, fairer and more growth-oriented.

Right now, there are multiple slabs: 0%, 5%, 12%, 18% and 28%. The plan is to move towards just two main slabs—a standard rate of 18% and a lower "merit" rate of 5%—with only a handful of exceptions. Under the proposed rate rationalization, many daily-use essentials such as household groceries, cleaning supplies, stationery, basic kitchenware and common footwear, which currently attract 12% GST, could be moved to the 5% slab.