The Indian government is preparing a major GST reform India plan, set to be announced by Diwali 2025. According to government sources, the revamped structure will simplify GST tax slabs, reduce rates for most goods, and bring relief to consumers and businesses.

A Group of Ministers, including state finance ministers, is working on rationalising rates. The proposal introduces just two main GST slabs—5% and 18%—instead of the multiple slabs used today. Luxury goods will face a special 40% rate.

• Under the proposed GST changes 2025:
• 99% of goods in the 12% slab will move to the 5% slab.
• Around 90% of goods in the 28% slab will drop to 18%.
• Daily-use products will be taxed at 5%.
• Tobacco products will have a 40% GST rate, keeping the total India tobacco tax 40% burden at the current 88%.
• Petroleum products like diesel and petrol will remain outside GST.

The goal is to get people to spend more, which could balance out any money the government loses from cutting GST rates.

In his Independence Day speech, Prime Minister Narendra Modi called these changes a “Diwali gift” for the people. He said they will make essential items cheaper and help small businesses grow. He also stressed that India should focus on making high-quality, affordable products to become more self-reliant.

PM Modi also announced a new task force to recommend all necessary reforms for a 21st-century GST system. He emphasised that self-reliance is about building internal strength and capabilities, not limiting others, and that it is essential for maintaining India’s economic power.

With GST changes 2025, the government hopes to make the tax system simpler, fairer, and more growth-oriented, while giving relief to the common man and ensuring India’s economic resilience.