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Key Points

Finance Minister Nirmala Sitharaman announced upcoming GST reforms that will significantly benefit small businesses. The government plans to eliminate the 12% and 28% GST rates, keeping only 5% and 18% rates. These changes are part of Prime Minister Modi's promise of major GST reforms as a Diwali gift to the nation. The 56th GST Council meeting will discuss these next-generation reforms aimed at reducing compliance costs.

Key Points: Sitharaman Announces Next-Gen GST Reforms to Help Small Businesses

  • GST Council meeting to discuss eliminating 12% and 28% tax rates
  • Reforms aim to simplify regulations for startups and MSMEs
  • Modi promised big GST reform as Diwali gift
  • Task force created for next-generation economic reforms
3 min read

Rollout of next-gen GST reforms will help small businesses: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman reveals upcoming GST reforms to simplify taxes and reduce compliance burden for MSMEs ahead of crucial GST Council meeting.

"The planned rollout of the next generation of GST reforms... will further reduce compliance burden - Nirmala Sitharaman"

New Delhi, September 2

The upcoming next-generation Goods and Services Tax (GST) reforms will further simplify tax processes and reduce compliance burdens, particularly for small businesses, Union Finance Minister Nirmala Sitharaman said on Tuesday.

The Finance Minister was speaking at the 120th Foundation Day Celebrations of City Union Bank in Chennai.

"The Prime Minister has recently announced the creation of a task force for next-generation reforms with a clear mandate to simplify regulations, lower compliance costs, and build a more enabling ecosystem for startups, MSMEs, and entrepreneurs. Complementing this is the planned rollout of the next generation of GST reforms with a council meeting tomorrow and the day after," Sitharaman said, adding that in the coming months, there will be further reduction in compliance burden, making it easier for small businesses to thrive.

The 56th meeting of the Goods and Services Tax (GST) Council will be held on September 3-4, according to an official memorandum.

According to government sources, the Central Government proposes to eliminate the 12 per cent and 28 per cent GST rates, retaining only 5 per cent and 18 per cent GST rates.

The announcement for the GST council meeting was made days after Prime Minister Narendra Modi announced during his Independence Day Speech that people were going to get a very big gift on Diwali and the government had embarked on a "big reform of GST".

Sitharaman said that over the past 11 years, more than 56 crore Jan Dhan accounts have been opened, with a total deposit balance of Rs 2.68 lakh crore. Of these accounts, 67 per cent were opened in rural or semi-urban areas, and women hold 56 percent, she added.

"A bank account is not just a passbook; it is a passport to opportunity, enabling access to credit, savings, insurance and dignity," she added, according to a post on X by Sitharaman's office.

The minister said that India's scheduled commercial banks have recorded massive improvement in their asset quality and as a result, NPAs have come down.

"Macro stress test results show that the Scheduled Commercial Banks' aggregate capital levels will continue to remain above the regulatory minimum," the post added.

Bank deposits with Scheduled Commercial Banks (SCBs) recorded a year-on-year growth of 11.3 per cent as of June-end 2025, slightly lower than the 11.7 per cent growth (net of merger) seen a year earlier, according to the latest quarterly data released by the Reserve Bank of India last Friday.

The surge was primarily driven by a strong rise in term deposits, which grew 13.5 per cent year-on-year, significantly outpacing the modest 5.4 per cent growth in savings deposits.

- ANI

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Reader Comments

P
Priya S
As a small business owner, I've spent countless hours on GST filings. Hope these reforms actually make things simpler and not just more paperwork with a different name. The two-rate structure sounds promising though!
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Michael C
The Jan Dhan numbers are impressive - 56 crore accounts with 2.68 lakh crore deposits! Financial inclusion is happening at scale in India. This foundation will help make GST reforms more effective.
A
Ananya R
Removing 12% and 28% slabs and keeping only 5% and 18% would be fantastic! The current multiple rates create so much confusion. Hope they implement this quickly before the festive season 🪔
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Sarah B
While I appreciate the intent, I hope they consult actual small business owners during this reform process. Sometimes policies look good on paper but create practical challenges for those actually implementing them.
V
Vikram M
The timing around Diwali is perfect! If these reforms reduce compliance costs, it will give small businesses the breathing room they need during the peak shopping season. Fingers crossed! 🤞

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