Big GST Reforms and Relief This Diwali, Promises the PM

The Indian Prime Minister Narendra Mod, in his Independence Day speech from the Red Fort, i announced new GST reforms ahead of Diwali 2025, aiming to cut taxes on daily-use goods, simplify compliance, support MSMEs, and boost consumption, promising cheaper essentials and relief for households and businesses across India.

Relief on Everyday Commodities

On India's 79th Independence Day on August 15, 2025, Prime Minister Narendra Modi made a historic announcement from the ancient Red Fort: his administration will launch the next phase of Goods and Services Tax (GST) reforms before Diwali this year, offering a significant cut in taxes on household-use items to provide relief to millions of Indian families.

Double Diwali for Indian Families

Terming the proposed GST reforms as a "double Diwali" bonanza for citizens, PM Modi asserted that these steps would lighten the burden on the common man, bringing necessary commodities, including food, household items, and daily essentials, within everyone's reach at an all-time low. The Prime Minister mentioned the requirement of a holistic review of the GST regime, which was initially launched in July 2017 and has served eight years in operation.

Live Updates | PM Modi Promises Relief on Daily Goods with New GST Reforms This Diwali

"Eight years ago, we have worked towards making GST simpler and reducing the tax burden of the nation. Now the time has arrived for next-generation reforms that will cut across-the-board taxes, ease compliance, and make our economy stronger. By this Diwali, everyday essentials will become much lower-priced—a great blessing for families and small businesses," Modi announced in his speech.

Key Features and Economic Impact

Based on government officials and policymakers, the changes are expected to include:

• Streamlining GST rate slabs: The long-sought scheme aims to do away with the existing 12% GST slab, merging impacted goods either into the low 5% category—reserved for essential items—or the higher 18% slab for non-essential items.
• Less expensive essentials: Food-grains, processed foods, personal care items, and other everyday things will become less expensive, improving consumer confidence and spending ability in urban and rural India.
• Gains for MSMEs: The changes are designed to benefit micro, small, and medium enterprises (MSMEs), cutting compliance costs and promoting entrepreneurship and job creation.
• Improved economy and openness: Through simplifying the system and reducing tax levels, the government hopes to increase consumption, improve revenue collection, as well as enhance openness.

Political and Social Context

The announcement precedes the decisive GST Council meeting in September 2025, during which the details of reform and rate reductions will be decided with advice from state governments. With economic metrics robust and India poised to enter a phase of growth, the government's action has been interpreted as both pro-consumer and pro-business, reverberating with the overall aim to "Make in India" and spur domestic manufacturing.

Looking Ahead

As Diwali approaches, millions of Indian families and businesses are eagerly anticipate the new GST structure, the one expected to be simpler, fairer, and more beneficial for all. The reforms symbolise Modi’s commitment to inclusive growth and economic transformation, marking this festival season as a historic turning point for India’s tax policy and daily life.