The Finance Ministry shared a proposal for a simpler Goods and Services Tax (GST) system. It suggests having just two main tax slabs a “standard” rate and a lower “merit” rate along with special rates for certain items. This comes after Prime Minister Narendra Modi in his Independence Day speech at the Red Fort announced that major GST reforms will be introduced by Diwali. He said these changes will give big tax relief to ordinary people and help small businesses. The proposal has been sent to the Group of Ministers (GoM) set up by the GST Council to study the idea. The main goals of these reforms are to make GST easier adjust tax rates fairly and give benefits to everyone especially the common man women students the middle class and farmers. The Finance Ministry has shared details of its planned GST overhaul. This new setup would replace the existing 5 per cent 12 per cent 18 per cent and 28 per cent tax slabs. The final decision is expected at the upcoming GST Council meeting next month. One of the main suggestions is to lower taxes on everyday items as well as on goods that people aspire to own. This would make them more affordable encourage people to buy more and ensure both essential and luxury items are within reach of more citizens. With the end of the compensation cess the government now has more financial room to adjust and align tax rates under the GST system for long-term stability. The ministry also wants to fix the inverted duty structure where tax on inputs is higher than on the finished product. This change would reduce the build-up of unused tax credits and encourage more domestic production. Another important step is to sort out classification issues so that tax rates are clearer disputes are fewer and compliance becomes easier. This would also make the system fairer and more consistent across industries. According to the ministry the goal is to provide clear and stable tax policies for the long term which will boost industry confidence and help businesses plan better. What PM Modi said on GST reform? On Independence Day PM Modi made a bold announcement about setting up a high-level task force to drive major reforms in governance taxation and public services. “This Diwali we will celebrate a double Diwali” he said promising a big gift for the people — a major cut in GST on everyday household items. Calling a review of GST rates “the need of the hour” PM Modi assured that taxes for common citizens will be brought down significantly marking a major shift in the GST system.