Next Gen GST: A Game Changer for India's Economy?

The proposed 'Next Gen GST' reforms aim to simplify India's tax structure by consolidating it into two slabs of 5% and 18%, replacing the existing four slabs. This overhaul is projected to boost the economy and consumption by lowering taxes on common goods.

In a significant move, senior government officials announced the 'Next Gen GST' reforms, aiming to simplify the tax regime with just two slabs at 5% and 18%. If the GST Council approves, this reform will replace the current four-slab system.

Officials stated that almost all common-use items would shift to the lower 5% tax bracket, potentially leading to increased consumer spending. The revised structure is expected to mitigate tariff threats and stabilize the economy by ensuring lower input tax credit accumulation.

With a focus on benefiting the middle class, farmers, and MSMEs, the reform also addresses tariff challenges posed by the U.S. The GST Council, comprising Union Finance Minister and state representatives, will deliberate on this proposal next month.

(With inputs from agencies.)