New Delhi: On the occasion of India’s 79th Independence Day, Prime Minister Shri Narendra Modi addressed the nation from the Red Fort, spotlighting the transformative impact of the Goods and Services Tax (GST) introduced in 2017. The Prime Minister emphasized GST’s role in streamlining India’s taxation landscape and fostering **nclusiveGrowth across sectors, benefitting the common man and contributing to the country’s journey toward an ‘Atmanirbhar Bharat’ (self-reliant India).
GST: A Pillar of Economic Reform
Prime Minister Modi reiterated how GST has simplified India’s indirect tax structure, reduced barriers to inter-state trade, boosted revenue transparency, and brought relief to various segments: the common man, farmers, the middle class, MSMEs, and more.
Center’s Next-Generation GST Reforms: The Three Pillars
Looking ahead, PM Modi announced a new wave of reforms based on three foundational pillars:
1. Structural Reforms
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Correction of Inverted Duty Structures: Aligning input and output tax rates across sectors to minimize input tax credit build-up and support domestic value addition.
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Resolving Classification Issues: Streamlining product and service classifications to minimize disputes, simplify compliance, and ensure consistency.
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Stability and Predictability: Providing long-term clarity on rates and policy to foster industry confidence and facilitate business planning.
2. Rate Rationalisation
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Reducing Taxes on Essential and Aspirational Goods: Making daily and aspirational items more affordable, thus boosting consumption and accessibility for all, especially women, students, farmers, and the middle class.
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Simplification of Slabs: Moving towards a simpler tax regime, ideally with only two slabs (standard and merit), with special rates reserved for select goods.
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Post-Compensation Cess Flexibility: With the cessation of the compensation cess, there is greater fiscal flexibility to align and rationalize tax rates for sustainable long-term growth.
3. Ease of Living
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Seamless, Technology-Driven Registration: Making business registration smoother and faster, particularly for micro and small businesses and startups.
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Pre-Filled Returns: Reducing manual intervention and error by providing pre-filled GST returns.
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Faster, Automated Refunds: Ensuring quicker and fully automated refunds, especially for exporters and businesses affected by inverted duty structures.
Stakeholder Engagement and Cooperative Federalism
The Centre has formally shared its reform proposals on GST rate rationalisation and structure with the dedicated Group of Ministers (GoM) appointed by the GST Council. The government seeks to build a broad-based, consensus-driven dialogue with all States in the spirit of cooperative federalism. The intention is to ensure that the next meeting of the GST Council will finalize actionable recommendations so the benefits of reform reach citizens and businesses within the current financial year.
Impact and Outlook
The planned GST reforms underscore the government’s commitment to making GST a simple, stable, and transparent tax regime. The reforms are expected to:
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Reduce disputes and compliance burdens,
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Provide relief to vulnerable and aspirational segments,
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Foster a climate of predictability and confidence essential for investment and economic growth,
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Stimulate sectoral expansion and the ease of doing business across India.
Conclusion
Prime Minister Modi’s address affirms that the evolution of GST is central to India’s vision of a robust, transparent, and inclusive economy. By focusing on structural clarity, rationalised rates, and ease of living, the government is building a tax system that works for all—laying the foundation for Atmanirbhar Bharat and a developed economy by 2047.
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Source: PIB
