The GST Council, led by Union Finance Minister Nirmala Sitharaman, will hold a two-day meeting in New Delhi on September 3-4, 2025. It will focus on GST reforms, including lowering tax rates, simplifying compliance, and making structural changes. Officials say the new model could have two slabs - 0-5% on essential goods and 12-18% on most products — while a 40% sin tax will stay on demerit items like gutkha and tobacco. This could make products like home appliances such as air conditioners, TVs, and washing machines cheaper.

According to a report by Business Today, on the 120th Foundation Day of City Union Bank, Sitharaman stated that the goal of GST reforms is to make the economy fully open and transparent and to reduce compliance burdens for small businesses. She also mentioned that PM Modi has formed a task force for next-generation reforms, which will focus on creating a friendly environment for startups, MSMEs, and entrepreneurs.

Sitharaman said, 'The plan for next-gen GST reforms, which will be discussed in the council meeting starting tomorrow, will further ease the burden on small businesses and provide a supportive environment for growth.' She emphasized the role of banks in increasing credit, infrastructure support, and timely funding to MSMEs and the poor as part of the vision for Developed India 2047.

Experts believe these reforms will simplify the tax system. Brijesh Gandhi of NPV & Associates told the publication that GST 2.0 will merge the existing slabs of 5%, 12%, 18%, and 28% into a new system: 5% on essential goods, 18% on most goods, and 40% on products like gutkha and tobacco.

Gandhi explained, "Toothpaste, umbrellas, sewing machines, and small washing machines will fall into the 5% merit slab. Electronics, air conditioners, TVs, small cars, and two-wheelers will move from 28% to the 18% slab. This will cut the tax burden by 10%, and prices could drop before the festive season."

He also mentioned that cement could be reduced from 28% to 18%, providing relief to the construction sector. At the same time, inputs costs and exemptions for agriculture, textiles, and insurance premiums could benefit these sectors, leading to increased production, sales, and affordability of homes.

The market has responded positively, with expectations of increased consumption, lower inflation, and rising demand during the festive season. E-commerce companies are preparing for higher demand for larger products. While some states worry about losing revenue, it is widely believed that if implemented properly, GST 2.0 will enhance affordability and support long-term growth. The Central Board of Indirect Taxes and Customs (CBIC) has urged everyone to avoid rumors and noted that decisions are made jointly by the Center and states.