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PM Modi announced GST reforms to cost govt Rs 40000 crore in revenue, new rates to be rolled out by... thumbnail

PM Modi announced GST reforms to cost govt Rs 40000 crore in revenue, new rates to be rolled out by…

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PM Modi referred to the GST overhaul as a “double Diwali gift” intended to reduce the burden of tax on common people and accelerate economic growth.

general PM Modi announced GST reforms to cost govt Rs 40000 crore in revenue, new rates to be rolled out by...

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Prime Minister Narendra Modi announced a ‘big Diwali gift’ during his Independence Day Speech, proposing a big reform on Goods and Services Tax( GST) structure. Now, revamping the GST structure could cost the central government a potential revenue shortfall of Rs 40000 crore, as per Finance Ministry sources. It is also likely that the government may aim to roll out the new GST rates by Dussehra(October 2, 2025), with the scheduled GST Council meeting on September 2, 2025. 

The Fitment Committee, comprising GST Secretariat officers, has outlined a draft detailing the expected revenue deficit resulting from the GST overhaul. This shortfall will reportedly be shared between the Centre and states. 

GST council meeting

The 56th meeting of the GST Council is scheduled to take place on September 3-4 in New Delhi, with an officers’ meeting to be held on September 2. Initially, it was planned for late September or early October; however, it has been advanced after consultations with states. Hence, the new GST rates can be released early, before Diwali, as per new reports. 

“The undersigned is directed to refer to the above subject and to convey that the 56th Meeting of the GST Council will be held on 3rd and 4th September, 2025,” an official memorandum issued by Arvind Shrivastava, Secretary to the Govt. of India and ex officio Secretary to the GST Council, read.

“The details of the venue of the meeting and agenda items for the 56th Meeting of the GST Council and Officers’ Meeting will be communicated in due course of time,” the memorandum stated.

GST makeover

PM Modi referred to the GST overhaul as a “double Diwali gift” intended to reduce the burden of tax on common people and accelerate economic growth. “This Diwali, I am going to make it a double Diwali for you. We are bringing next-generation GST reforms that will reduce the tax burden across the country. Daily-use items will become cheaper, and MSMEs will benefit hugely,” PM Modi said during his 12th consecutive Independence Day speech. The move is expected to significantly impact revenues for both central and state governments.

Also read: Govt proposes to exempt health, life insurance from GST, new reform proposal to be levied at…

The objective of the proposed GST revamp is to simplify the tax system by introducing a two-tier rate structure of 5% and 18%, along with a 40% levy on sin goods.  While the major changes are unlikely, except for a proposal to remove GST on individual health and life insurance premiums.

According to the report, the Centre proposed to eliminate the then-current 12 per cent and 28 per cent GST rates. 99 per cent of the 12 per cent slab was proposed to move to the 5 per cent slab, and 90 per cent of items in the 28 per cent slab were proposed to move to the 18 per cent slab.

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