Understanding India's Complicated GST System and Modi's Reforms to Lower Goods Prices

Written by Emily J. Thompson, Senior Investment Analyst

Source: Reuters

Updated: Aug 19 2025

0mins

Source: Reuters

Proposed Tax Reform: Prime Minister Narendra Modi has announced India's largest tax reform in eight years, aiming to lower consumption taxes on everyday goods and small cars starting in October.
GST Structure: The Goods and Services Tax (GST), implemented in 2017, consists of four tax slabs (5%, 12%, 18%, and 28%) but has faced criticism for its complexity, with varying rates on similar products.
Impact of Changes: The proposed reforms include abolishing the 28% slab and reducing taxes on many items, which could lower prices for consumers and boost demand in sectors like construction and personal care.
Economic Implications: While the tax cuts may increase consumption and GDP growth, they are expected to impact state finances more significantly than federal revenues, requiring approval from the GST Council before implementation.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.