GST Reforms: Transitioning to a Simplified Tax Regime

The Central Board of Indirect Taxes and Customs (CBIC) plans to implement next-generation GST reforms by September 22, involving a reduction in tax slabs and revamped classifications for goods and services. The changes aim to boost economic activity, improve GST collections, and address industry concerns over input tax credit accumulation.

Devdiscourse News Desk | New Delhi | Updated: 04-09-2025 20:37 IST | Created: 04-09-2025 20:37 IST

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Country:
India

The Central Board of Indirect Taxes and Customs (CBIC) is gearing up for a significant overhaul of the Goods and Services Tax (GST) system, set to be implemented by September 22. CBIC chairman, Sanjay Kumar Agarwal, confirmed this during an interview, emphasizing the shift to a more streamlined tax structure.

The reforms, approved by the GST Council, involve reducing the GST tax slabs to two primary rates of 5% and 18%, with a special rate of 40% on ultra-luxury and demerit goods. This rationalization, transitioning from revenue neutrality to a merit-based classification, promises economic benefits including increased consumption and higher GST collections.

Industry concerns over the accumulation of input tax credit under the new regime were addressed, suggesting businesses could utilize their ITC to offset liabilities, ensuring a seamless transition. The CBIC is actively engaging with industry players to facilitate a smooth adaptation to these changes.

(With inputs from agencies.)