PM Announces Next-Generation GST Reforms
In News
What Happened
Why It Matters
Background
History & Context
What Changed
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Tax Brackets BEFORE: The system operated on four primary tax brackets of 5%, 12%, 18%, and 28%. NOW: It is simplified into a two-tier core structure consisting only of 5% and 18% rates.
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Intermediate and Premium Rates BEFORE: Standalone 12% and 28% categories existed, causing classification disputes between similar goods. NOW: The 12% and 28% slabs are completely removed, absorbing those goods into the remaining lower or higher tiers.
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Sin and Luxury Taxation BEFORE: Luxury and sin goods were taxed at the highest bracket of 28% plus a highly variable Compensation Cess. NOW: These items are taxed under a unified 40% de-merit rate, streamlining the penalty taxation structure.
Prelims Angle
NCERT Connection
Practice Questions
Q1
Correct Statement(s)Which of the following statements is/are correct regarding the 'Next-Generation GST Reforms' announced in 2025? 1. The reforms propose replacing the existing four-tier GST structure with a two-tier core structure comprising 5% and 18% slabs. 2. A new unified 40% de-merit rate has been established specifically for essential agricultural inputs to correct the inverted duty structure.