Next-Gen GST Reforms: A Diwali Gift for Businesses and the Common Man

On August 15, 2025, from the iconic Red Fort, Prime Minister Narendra Modi made a bombshell announcement that has businesses, economists, and common folks talking, be it on social media, streets or news studios. 

“The government will bring Next Generation GST reforms, which will bring down the tax burden on the common man. It will be a Diwali gift for you,” PM Modi declared. 

What we feel is that this is not just another political promise. This is about to change how you shop, how businesses operate, and how our economy grows.

In this blog, we will explore everything we know about Next-Gen GST reforms and what they mean for businesses. 

What Exactly are these GST Reforms?

When GST was introduced in 2017, it was launched with the motto of “One nation, one tax“. However, with the passage of time, it became really complex. We ended up with four tax slabs (5%, 12%, 18%, and 28%) plus additional cess on certain items.

And that’s why he said “Eight years later, time demands that we review it” in his speech dated August 15 2025. 

The Next-Gen GST Reforms [Expected]

It is expected that the government will collapse the four-slabs GST structure into two slabs. In other words, the next-gen reforms allegedly proposed to keep 5% and 18% intact; the rest of the slabs will be discontinued. 

You must be wondering what happens to all those items that are currently falling under the slab of 12% and 28%, isn’t it so? 

It is expected that most items falling under the 12% slab will come down to 5% slab, and the items of the 28% slab will come down to 18%. 

However, this is not confirmed yet. 

Apart from these, there will be a special slab for sin goods such as cigarettes, taxed at 40%. 

Why Next-Gen GST Reforms Matter for Small Businesses and MSMEs 

Do you have a small business or are you considering starting a small business? If yes, you should keep your eyes on these reforms. 

The existing GST compliance has been a revolutionary step in the history of indirect taxation in India. However, meeting compliance deadlines and adhering to regulatory requirements was a bit complicated for small business as well as MSMEs. 

BJP MP and CAIT Secretary General, Praveen Khandelwal, said “it would ease pressure on small traders and MSMEs” to TOI. 

GST Reforms’ Connection with Trump’s Tariff 

Experts see GST reforms as a move to curb the negative impact of Trump’s tariffs on India. The following points explain how this step can help us to negate the USA’s tariff policy’s ill effects on India’s economy: 

• Growing the Formal Economy: Lower taxes could encourage small shops to register for GST, boosting government revenue over time.

• Boost to Manufacturing: Lower tax on raw materials helps Indian manufacturers to compete globally. 

• More Money to Spend: This step is expected to boost local spending, which drives India’s economy, softening the blow from tariffs 

The Biggest GST Reforms: Road to Implementation

So what’s next? The timeline is clear: Diwali 2025. 

That’s roughly two months from now. But don’t expect everything to change overnight on Diwali day.

The reforms may follow the steps mentioned below: 

• Final approval from the GST Council

• Detailed rate notifications

• System updates and testing

• Business communication and training

• Phased implementation

What can you do right now?

Whether you’re a business owner or a consumer, here’s how you can prepare for next-gen GST reforms:

For Business Owners:

• Stay updated with official GST notifications

• Review your current GST rate applicable to your goods and understand how they might change with the biggest GST reforms

• Start training your accounts team on the upcoming changes.

• You may start updating your business process to handle the new GST rates.

For Consumers:

• You may delay major purchases until after Diwali if possible.

• You can keep track of which items are getting cheaper.

• Plan your festive shopping around the new rates.

The Bigger Picture Behind GST Reforms: Building Atmanirbhar Bharat

These are not GST reforms; this step is a part of the bigger picture of PM Modi’s plan to create an Atmanirbhar Bharat (self-reliant India). As the taxes are reduced, people will give preference to buying domestic products over imported ones as they will be more budget-friendly comparatively. 

Now, as a common man, you must be scratching your head thinking, ‘how will the GST reforms lead to achieving the goal of a self-reliant India?’ Isn’t it so? 

Here is the possible chronology: 

Lower taxes → More affordable products → Higher demand → More production → More jobs → Stronger economy.

It is not only about saving money on your next shopping; it is about creating a better and more developed India.

Closing Notes 

Unlike any other gift, this gift, in the form of GST reforms, is going to benefit you throughout your life, whether you are an individual or a businessman. Just like you, we are also excited about what these GST reforms will bring and how they can positively impact businesses and individuals. What are your expectations from these biggest GST reforms? Let us know in the comments.