GST REFORM 2025

Current Context: Government will implement the next-generation GST reform from 22 September 2025 with a simplified two-rate structure and digital filing.

ABOUT GST REFORM 2025

• New Structure: Two main GST slabs – 5% and 18%.
• New High Rate: 40% GST on luxury and sin goods (pan masala, cigarettes, etc.).
• Ease of Filing: Faster refunds, digital filing, and reduced disputes.

BENEFITS OF REFORMS

• Social Protection: Exemption on GST for insurance and essential medicines.
• Lower Prices, Higher Demand: Reduced rates increase consumption and savings.
• Support for MSMEs: Lower input costs for cement, auto parts, handicrafts.
• Ease of Living: Simpler structure → fewer disputes and easier compliance.
• Wider Tax Net: Simpler rates promote compliance and boost revenue.

KEY CHALLENGES

• Revenue Loss: ~₹48,000 crore on FY23–24 base.
• Removal of Input Tax Credit (ITC): On healthcare and insurance products may cause cascading effect.
• Uncertainty over National Anti-Profiteering Authority: Its revival not clarified.