New GST regime will be consumer-centric, says Centre

In his Independence Day address, the preview of the new GST regime previous by Prime Minister Narendra Modi will be consumer-centered, with special emphasis on the poor, MSMEs, middle classes and farmers, senior government sources said on Sunday (August 17, 2025).

Sources said that the new two-level goods and service tax (GST) structure would be the twin objective to simplify and more rational for rates and processes of 18% and 5% rates, as it was the intention to be originally, the sources said.

‘More equitable taxation’

“It has been making it for some time. Our learning has been going into it for the last eight years, and it will be a fundamental change in the taxation template,” said a senior executive officer. “The new GST regime will make our taxation more equitable, and will reduce taxes consuming these four categories. The template will be greater than the consumers’ perspective, and it will be explained to the states from the perspective of consumers.”

The Center expects any reduction in revenue that it may soon offset rate rationalization and procedure simplification by a new boom in the expected economy. “Revenue will not be reduced by low rates, and we expect compliance and collections to be more,” an official said, “an official said, the upcoming regime will be” flickering “.

Most items at the rate of 28% of GST will go up to 18% and “some” will go up to 40%, which will apply to extraordinary objects, called “sin goods”, sources said.

“Revenue may fall in a very short time, but we expect a change in consumption and ease of compliance for it. Thus, it will be largely sustainable exercises.”

Diwali deadline

The Center hopes that states will be placed on board with proposals in time for Deepawali – October 20 – this time limit is that it has been determined to set itself in speed. In a press release after the PM’s speech, the Finance Ministry said that the Center would engage with the state governments in later weeks, in the next GST Council meeting in the run-up.

Two groups of ministers (involving representatives of state governments) – one rate on rationalization and second on compensation cess – will have to approve the details before going to the GST Council for approval. The GST has been a continuous subject of conflict between the opposition ruled states and the Center, but is not expected to resist its reform proposals later.

“Concerns about any possible revenue deficit are not alone to deal with them (opposition ruled states). The Center and the states should work together to expand the revenue using the opportunity.

He also said that, since the Center does not have any representative in GOM on rate rationalization, if GOMS takes a decision against the proposal of the Center, it will seem that the states are taking decisions against the common man to reduce taxes.

After the GST Council, both Gomes are expected to meet in the coming weeks. A source said that the compensation cess will soon be closed before the legal end of March 31, 2026. While it was originally determined to shut down in 2022, its duration was extended to repay the loan taken to compensate the states as the cess collection was killed by Kovid -19 epidemic itself.

That loan will be repaid prematurely. However, it also causes a problem for the center as cess also applies to goods like tobacco.

“If the cess is finished, it will significantly reduce the effective rate of taxes on tobacco, gutka and other sins,” the formula explained. “And this is something that the center cannot do. Therefore, it was still another reason that GST Revamp needs to be done soon.”

According to sources, GST improvements are being improved by the United States amid global uncertainties and tariff hazards.