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In I-day address, PM Modi promises ‘bahut bada tohfa’ to all Indians on Diwali. Check details
In I-day address, PM Modi promises ‘bahut bada tohfa’ to all Indians on Diwali. Check details
Prime Minister Narendra Modi, in his Independence Day address from the Red Fort on Thursday, announced that the government will roll out the next generation of GST reforms by Diwali this year, promising what he called a “bahut bada tohfa” (big gift) for all Indians.
The reforms, he said, will focus on rationalising tax slabs and reducing GST rates on essential and everyday-use items, aiming to provide direct relief to households and boost consumption.
“By this Diwali, you will see a new, simplified GST structure that makes life easier for the common man and strengthens our economy,” Modi said, adding that the changes will also enhance compliance and transparency.
Modi's announcement comes as India moves to simplify its GST structure, with a group of ministers preparing a report that will consider merging tax slabs and lowering rates on some products.
The government has previously said that it wants to change GST rates and reduce the number of brackets, referring to tax rates for different categories, under a tax regime introduced in 2017.
The country currently levies GST at 5%, 12%, 18% and 28% on most goods and services, excluding gold and silver, and applies an additional levy on so-called demerit items such as cigarettes and high-end cars.
Citi estimated that about 20% of items - including packaged food and beverages, apparel and hotel accommodation - fall under the 12% GST slab, accounting for 5-10% of consumption and 5-6% of GST revenue.
If most of these are moved to the 5% slab and some to the 18% slab, it could lead to a revenue loss of around 500 billion rupees, or 0.15% of GDP, potentially taking the total policy stimulus for households in the current 2025-26 financial year to 0.6%-0.7% of GDP, the brokerage said.
