Independence Day 2025: Prime Minister Narendra Modi on Friday, during his 79th Independence Day speech from the historic Red Fort, declared that the government will implement "next-generation GST reforms" by Diwali this year. The Prime Minister referred to the action as a "double Diwali gift" intended to reduce the burden of tax on common people and accelerate economic growth. “This Diwali, I am going to make it a double Diwali for you. We are bringing next-generation GST reforms that will reduce the tax burden across the country. Daily-use items will become cheaper, and MSMEs will benefit hugely,” PM Modi said during his 12th consecutive Independence Day speech.

The new reforms will simplify the current Goods and Services Tax (GST) regime, which has five broad slabs — 0 per cent, 5 per cent, 12 per cent, 18 per cent, and 28 per cent. According to sources, the government is mulling eliminating the 12 per cent slab and shifting items between the 5 per cent and 18 per cent slabs. The step would make essential goods and services cheaper for households, while lowering compliance for companies. Approximately 21 per cent of products are in the 5 per cent category, 19 per cent in the 12 per cent category, and 44 per cent in the 18 per cent slab.

Boost For MSMEs And Consumption

The Prime Minister asserted the reforms would bring considerable relief to MSMEs by reducing operational expenses and streamlining tax procedures. "These changes will make our tax regime more transparent and business-friendly, favoring growth and consumption," he further added. Although lower rates may initially cut into government revenue, enhanced compliance and higher consumption will likely cancel out the deficit over time.

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GST was implemented on July 1, 2017, replacing various state and central taxes with a single indirect tax system. The eight-year saga of GST has simplified taxes substantially, PM Modi stated, but now it is time to evaluate and enhance the system for the next decade. A high-level committee was constituted for the review, with states being consulted. The coming reforms, he stated, are aimed at "strengthen the economy and making life easier for the common man."

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UPI Platform Attracts Worldwide Acclaim

In his address, the Prime Minister also appreciated India's Unified Payments Interface (UPI) for transforming real-time digital transactions. "The world is considering the UPI platform a wonder today.". We process 50 per cent of global real-time transactions using UPI alone," he added, calling for India's youth to innovate and not rely on foreign platforms. PM Modi connected the GST makeover to the government's larger economic reforms to make India a developed country by 2047. The move is made before the GST Council is set to deliberate in advance of the festival season, and amidst global trade uncertainties. This will be a Diwali gift for all Indian homes. Lesser priced goods, healthier MSMEs, and a healthier economy, that is our promise," the Prime Minister said.