Daijiworld Media Network - New Delhi

New Delhi, Aug 19: Finance Minister Nirmala Sitharaman is expected to present the Centre’s proposal for a major overhaul of the Goods and Services Tax (GST) regime at a key two-day meeting of the Group of Ministers (GoM) starting August 20 at Vigyan Bhawan, New Delhi. The proposal, aimed at rate rationalisation and simplification, will be discussed by a six-member panel led by Bihar Deputy Chief Minister Samrat Choudhary.

At the core of the proposal is a shift to a simplified two-slab GST structure — 5% for essential items and 18% as the standard rate — in line with Prime Minister Narendra Modi’s recent Independence Day call for “next-gen GST reforms before Diwali.”

The GST Council is expected to meet on September 18-19 to take a final decision.

Global investment firm Morgan Stanley, in a recent report, noted that the proposed reforms, along with potential income-tax cuts and broader policy easing, could significantly boost India’s consumption-led growth. The report highlighted that such tax adjustments could act as an annual stimulus equivalent to 0.5–0.6% of GDP, lifting overall GDP growth by 50–70 basis points.

While the simplified GST structure could bring down CPI inflation by around 40 basis points and improve affordability for low-income households, Morgan Stanley warned of short-term revenue pressures for both the Centre and states. It also flagged the risk of a temporary slowdown in consumer spending as people await clarity on the new rates.

The Centre’s proposal focuses on three pillars: structural reform, tax rate rationalisation, and improving ease of living — all geared toward long-term economic efficiency and consumer-friendly taxation.