GST 2.0: How Will the New Tax Reform Benefit Everyone from Common People to Farmers?

GST 2.0: On the occasion of Independence Day, the Prime Minister announced several new schemes and reforms in his speech, including major changes in GST. He highlighted the importance of next-generation reforms under GST, which will provide relief to common people, farmers, the middle class, and MSMEs. The benefits of these reforms will begin this year itself.

To build an Aatmanirbhar Bharat (self-reliant India), the central government is proposing significant changes in GST based on three key pillars:

1. Structural Reforms

Ending inverted duty structure – Input and output tax rates will be aligned to reduce the extra tax burden on businesses.

Simplified classification – Tax rates will be made simpler and more uniform to reduce disputes and bring stability to industries.

Long-term stability – Clear long-term tax policies and rates will make business planning easier.

2. Rate Rationalisation

Lower taxes on essentials – Daily-use and necessary goods will become cheaper, boosting consumption.

Reduced slabs – The government plans to bring down the GST rate slabs to just two: one standard and one merit slab, with only a few exceptions.

Removal of compensation cess – This will provide more flexibility in determining tax rates in a logical manner.

3. Ease of Living

Simplified registration – Especially for small businesses and startups, with a tech-supported and time-bound process.

Pre-filled returns – To reduce manual entries and errors.

Faster refunds – Exporters and businesses facing inverted duty structures will get quicker, automated refunds.

Benefits Starting This Year

The GST Council will discuss the recommendations of the Group of Ministers (GoM) in its next meeting. The aim is to ensure that these reforms benefit people within this financial year itself.

The government wants to make GST a tax system that is simple, stable, and transparent. It is designed to promote inclusive growth, strengthen the formal economy, and enhance Ease of Doing Business (EoDB) across the country.

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