GST Rationalisation: Towards a People-Centric Fiscal Architecture

Rationalising GST is both symbolic and substantive: a gesture of continuity with the reformist past and a signal of confidence in the future.

- KARTIKEYA SHARMA

In Kautilya's Arthashastra, taxation is likened to the work of a bee—drawing nectar without harming the flower. This ancient wisdom finds renewed relevance in India's modern fiscal journey, most recently with the announcement of sweeping reforms to the Goods and Services Tax (GST).

Introduced in 2017 as India's most significant tax reform since Independence, GST unified a labyrinth of state and central levies into a common framework. It was hailed as a triumph of fiscal federalism and an institutional leap towards efficiency. Now, with the rationalisation of GST slabs proposed in 2025, India signals not just continuity but evolution—refining an already transformative measure into a more people-friendly, growth-oriented tool.

The reform seeks to simplify the current four-tier system into two principal slabs: 5 per cent for essential and merit goods, and 18 per cent for standard goods and services, while retaining a higher bracket for luxury and "sin" items. This restructuring is more than an administrative measure. It reaffirms the principle that taxation must be equitable and transparent, lowering the burden on the everyday consumer while ensuring the economy remains fiscally sound. By shifting items from the 12 per cent and 28 per cent categories into the lower brackets, the reform directly benefits households, small businesses, and aspirational consumers, reaffirming the GST as a "Good and Simple Tax", as was envisioned by the then Finance Minister, the late Arun Jaitley.