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The GST Tax system was introduced in India in 2017 to streamline and reduce scores of different taxes in the Centre and States which had made the tax system complicated and less efficient.
(KPL) The GST Tax system was introduced in India in 2017 to streamline and reduce scores of different taxes in the Centre and States which had made the tax system complicated and less efficient.
Working well in India, GST has become stable and generated revenue of about Rs 1.6 lakh crore (USD 20 billion) per month. Hence a need was felt to make more reforms in the GST to make it simpler and bring stimulus in the Indian economy.
The 56th GST Council Meeting held on 3 September, 2025 chaired by Indian Finance Minister Nirmala Sitharaman, has laid out the 7 pillars of Next-Gen GST reforms that will shape India’s economic future.
The outcomes highlight how GST continues to evolve into a citizen- and business-friendly system, driving growth and stability for Bharat’s economy. Earlier the Unified India’s tax system with One Nation, One Tax expanded the taxpayer base and ensured stable revenues.
GST 2.0 simplifies processes with a 2-tier structure (5% and 18%). This will lead to fewer classification disputes, smoother duty structures and faster refunds for better liquidity. GST 2.0 has simplified filing through technology. It allows easy registration for small and low-risk businesses (license in 3 days). Exporters can have 90% upfront provisional refunds. The new system has end-to-end digital compliance with e-invoicing and AI-driven risk detection. GST 2.0 keeps the interests of consumers first.
Essentials commodities are in the 0–5% bracket. GST for high-value items like cars and appliances is down from 28% to 18% making daily needs affordable and aspirations achievable.
The new system empowers MSMEs and manufacturers. The rates are simpler to support one of India’s flagship programmes ‘Make in India’. Moreover rules for doing business have been made easier.
GST 2.0 will provide sustainable revenue growth for all States. Rationalised rates will lead to higher demand and more consumption.
This fiscal federalism is powering India’s growth story.
Lower taxes means higher savings.
This ensures that families buy more, demand rises, and industries grow.
Consumer items like cars, appliances and electronics have been made cheaper in the new regime.
When people spending more, it power fuels growth across sectors.
The reforms approved in the GST Council meeting fulfilled PM Narendra Modi’s 15th August (Independence Day) promise from Red Fort, New Delhi to ease the tax burden on the middle class and poor. For example, milk is now tax free. Chocolates once taxed at 31% and mineral water at 27% are now reduced to 5% GST. Similarly items like soap, toothpaste, bicycles, furniture and kitchenware now has just 5% GST from 27%-28% earlier. GST on farm equipment has been reduced from 20% to 5%.
These reforms are in line with Government’s policy of ‘Ease of living’ for common citizens and ‘Ease of doing business’ for businesspersons. They are one more step in making India the 4th largest economy of the world in the next few years and a ‘Viksit Bharat’(Developed India) by 2047 when India marks 100 years of its Independence.
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