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New GST Reforms of New India | COVER STORY
Simplification of GST rates Ease of Living
n Rationalisation of rates involves moving from n This includes implementing procedural reforms for ease
a complex multi-slab system to a simple two- of living and business.
rate structure for most goods and services. n The registration process for small businesses and
n Under this, the old structure of 5%, 12%, startups who wish to pass Input tax Credit less than Rs.
18% and 28% (including cess on some items) 2.5 lakh per month and opt for the simplified scheme
has been broadly replaced by a two-tier system and for low risk businesses will now be completely
of 5% merit rate (for essential and commonly digital and simplified. Automatic registration will be
used goods and services) and 18% standard available within 3 working days of applying. About 96%
rate (for most other goods and services). of new applicants will benefit from this.
n A special rate of 40% has been fixed for few n Pre-filled forms are already available for filing tax
select luxury and demerit items. This special returns, which has reduced the chances of error and
rate replaces the old 28% plus cess (wherever saved time. The refund process will now be improved
applicable) slab on these. to provide for relief from blockage of huge chunk of
the working capital for exporters and taxpayers who are
n Under this, rates of 391 items have been
changed, while the currently applicable GST eligible for refund of accumulated Input Tax Credit on
rates on 357 items have been reduced. account of inverted duty structure.
n Easy registration for small suppliers selling goods on
e-commerce platforms across states; currently they face
challenges in maintaining principal place of business in
Benefit each such state. An in-principle approval has been given
by the GST Council to the concept of a simplified GST
registration mechanism for such suppliers. The detailed
According to Finance Minister modalities for the same will be placed before GST Council.
Nirmala Sitharaman, the reduction
in rates will cause a revenue loss Benefit
of about Rs 93,000 crore. However,
the 40 per cent slab will generate an A simple and unified tax system
additional Rs 45,000 crore. This will reduces business costs and promotes
compensate for almost half of the exports. This can make India a
loss. Along with this, the increase stronger and more competitive player
in consumer spending due to lower in the global market. With lower prices
prices will also compensate for this. on items ranging from groceries to
The economy will also get a boost. medicines, the common people have
directly benefited, and industries have
also gained from the new system. With
only two tax rates, there will also be a
reduction in compliance burdens.
be a landmark in India’s economic landscape. GST tum, and enthusiasm.
emerged as an important medium for contributing to Now, September 22, 2025, has become another
the nation-building. The date of July 1, 2017, aligned the milestone in the development journey, making the busi-
aspirations of the common people of the country with a nesses, and the economy more convenient, simpler,
celebration of probity, bringing new direction, momen- and beneficial. The new reform in the GST system is a
October 1-15, 2025 || NEW INDIA SAMACHAR 21
