What are the main changes in the GST announcement?

A simpler two-slab system (standard and merit) and a broad reduction where most items in the 12% slab are expected to move to 5%.

When will the new GST rates take effect?

The reforms are planned to be finalized in September 2025 and implemented before Diwali 2025, subject to GST Council approval.

Which items could get cheaper?

Daily-use products that currently attract 12% GST—such as packaged food, apparel ranges, and some hospitality services—are expected to be cheaper if moved to 5%.

How will businesses benefit?

Simpler slabs reduce compliance workload, disputes, and working capital lock-ups for MSMEs and other businesses.

In a special Diwali gift to citizens, Prime Minister Narendra Modi has announced a reduction in the Goods and Services Tax (GST) on selected items. The move is aimed at easing household expenses, boosting festive season sales, and supporting small businesses.

This GST cut means lower prices on essential and popular products, helping families save more during their festive shopping. Economists say it could also give a push to the economy by increasing demand in the market.

GST Cut by Diwali 2025: Two-Slab System, 12% Items Likely to 5% — PM Modi

GST Update

GST Cut by Diwali 2025: Two-Slab System; 12% Items Likely to Move to 5%

Prime Minister Narendra Modi announced next-generation GST reforms to be rolled out before Diwali 2025. The plan simplifies the slab structure and lowers tax on many daily-use items.

What’s Changing

Simplified slabs: Current 5%, 12%, 18%, 28% will give way to just two core slabs — Standard and Merit. A short list of items may have special rates.
Rate cuts on essentials: A large share of products currently taxed at 12% may move to 5%, reducing prices for households.
Cleaner structure: Fewer slab changes and simpler rules aim to reduce disputes and improve ease of doing business.

Why It Matters

For consumers: Cheaper prices on everyday items like packaged food, apparel ranges, and hospitality services currently in the 12% slab.
For MSMEs: Lower compliance burden, better cash flows, and fewer input-tax-credit issues.
For the economy: Potential boost to demand and consumption ahead of the festive season.

Proposed Timeline

Step	When	What to Expect
Announcement	Aug 2025	Government outlines next-gen GST reforms.
GST Council Review	Sep 2025	Council & GoM deliberate and finalize details.
Implementation	Before Diwali 2025	New rate structure goes live (post approvals).

Note: Exact item-wise rate changes will be confirmed in the official GST Council notifications. Update this page with the final list once published.

Quick Summary

Two-slab GST structure targeted before Diwali 2025.
Most 12% items expected to move to 5% to lower household costs.
Smoother compliance and reduced disputes for businesses.

Disclaimer: This article summarizes the government’s stated intent. Final rates and item coverage depend on GST Council notifications.