Finance Minister Nirmala Sitharaman stated that the proposed GST rate rationalization aimed to provide greater relief to the common man, farmers, the middle class, and MSMEs while ensuring a simplified, transparent, and growth-oriented tax regime.

Key Highlights

• Finance Minister announces next-gen GST reforms to provide relief to common citizens, farmers, middle class, MSMEs.
• Proposed GST overhaul includes rationalized rates, simpler structure by Diwali, benefiting consumers and insurance premiums alike.

In her address to the GST Council's group of ministers (GoM) on compensation cess, health and life insurance, and rate rationalization, the FM stated that rate rationalization would increase affordability, boost consumption, and make essential and aspirational goods more accessible to a larger population.

Over the next two days, the GoMs will discuss the Centre's proposed GST reforms. Sitharaman also stated that the reforms presented to the GoMs by the Centre are built on three pillars: structural reforms, rate rationalization, and ease of living.

She stated that the Centre's proposal aims to usher in the next generation of GST reforms in India's journey to become "Atmanirbhar Bharat".

Sitharaman stated that the reforms will correct inverted duty structures in order to reduce input tax credit accumulation and increase domestic value addition, as well as resolve classification issues for easier compliance and fewer disputes. The FM also stated during the meeting that it will ensure GST policy stability and predictability in order to boost industry confidence and long-term planning.

She added that upcoming GST reforms will ensure seamless, tech-driven, and time-bound registration, introduce pre-filled returns to reduce errors and mismatches, and enable faster and automated refunds, all with the goal of simplifying compliance, supporting businesses, and improving overall ease of living and doing business.

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"The central govt remains committed to building a broad-based consensus with the states in the coming weeks to implement the next generation of GST reforms in the spirit of cooperative federalism," FM was quoted in a post by the finance ministry on the microblogging site X.

In his Independence Day speech, Prime Minister Narendra Modi promised next-generation GST reforms, including a two-rate structure and simplified registration and refunds, aimed at providing relief to both consumers and businesses.