New delhi: The GST Tax system, introduced in India in 2017, aimed to simplify the complex network of taxes across the Centre and States. Over the years, it has stabilized and generated significant revenue of approximately Rs 1.6 lakh crore (USD 20 billion) monthly. As a result, there was a recognized need for further reforms to simplify the GST and stimulate the Indian economy.
According to Lao News Agency, the 56th GST Council Meeting, chaired by Indian Finance Minister Nirmala Sitharaman on 3 September 2025, unveiled the seven pillars of the Next-Gen GST reforms. These reforms are set to shape India’s economic future by making GST more citizen- and business-friendly. The unified tax system, known as One Nation, One Tax, has already expanded the taxpayer base and ensured stable revenues.
GST 2.0 introduces a simplified 2-tier structure with rates of 5% and 18%, reducing classification disputes and ensuring smoother duty structures. This update facilitates faster refunds, improving liquidity and simplifying
the filing process through technology. Small and low-risk businesses can now register easily, receiving licenses within three days. Exporters benefit from 90% upfront provisional refunds, and the new system ensures end-to-end digital compliance with features like e-invoicing and AI-driven risk detection. The reforms prioritize consumer interests.
Essential commodities fall within the 0-5% GST bracket, while high-value items such as cars and appliances see a reduction from 28% to 18%, making daily necessities more affordable. The new system supports MSMEs and manufacturers, aligning with India’s ‘Make in India’ program by simplifying business regulations.
GST 2.0 is expected to provide sustainable revenue growth for all States, with rationalized rates leading to increased demand and consumption. The reforms are part of India’s fiscal federalism, which is a driving force behind the country’s growth story.
Lower taxes contribute to higher savings, enabling families to spend more, which in turn boosts demand a
nd industrial growth. Consumer items like cars, appliances, and electronics have become more affordable under the new regime, encouraging spending across sectors.
The GST Council meeting’s approved reforms fulfill PM Narendra Modi’s Independence Day promise to ease the tax burden on the middle class and poor. Notably, milk is now tax-free, chocolates and mineral water see reduced GST rates of 5%, and items like soap, toothpaste, bicycles, furniture, and kitchenware have their GST lowered from 27%-28% to just 5%. Farm equipment GST has also dropped from 20% to 5%.
These reforms align with the Government’s policies of enhancing the ‘Ease of living’ for citizens and the ‘Ease of doing business’ for entrepreneurs. They represent a step toward making India the world’s fourth-largest economy in the coming years and achieving the vision of a ‘Viksit Bharat’ (Developed India) by 2047, marking 100 years of India’s Independence.