GST Reforms for Building an Atmanirbhar Bharat

Context:

On the occasion of the 79th Independence Day, Prime Minister highlighted the proposal for next-generation reforms in the Goods and Services Tax (GST), focusing on structural reforms, rate rationalisation, and ease of living.

About GST

GST was implemented on 1 July 2017 through the 101st Constitutional Amendment Act, 2016.
It replaced multiple indirect taxes (Central Excise, Service Tax, VAT, etc.) with a “One Nation, One Tax”
Governed by the GST Council (Article 279A), chaired by Union Finance Minister, with States/UTs as members.
It is a destination-based, value-added tax levied on the supply of goods and services.

Current GST Structure

Multi-tier slab system: 5%, 12%, 18%, 28% (plus cess on luxury/sin goods).
Special rates:0% for essentials, 25%/3% on specific items like diamonds, precious metals.
Dual GST model:CGST + SGST/UTGST for intra-state supply, IGST for inter-state supply.

Proposed Reforms – Key Features

Structural Reforms: Correction of inverted duty structures, resolution of classification disputes, and provision of long-term stability.
Rate Rationalisation: Moving towards fewer slabs (two broad categories – standard and merit), lowering taxes on essential/common goods, and reducing slab complexity.
Ease of Living & Doing Business: Seamless registration, pre-filled returns, faster refunds, tech-driven compliance.
Fiscal Impact: End of Compensation Cess (introduced to compensate States for revenue loss until June 2022) creates fiscal space for reform.