Preparations for a double blast on Diwali have begun, know which big decisions will be taken in the GST Council meeting

GST Council Meeting on September 3-4: Major Tax Reforms Expected Ahead of Diwali

All eyes are on the upcoming GST Council meeting scheduled for September 3 and 4, 2025, in New Delhi. The two-day session is expected to bring some of the most significant reforms since the introduction of the Goods and Services Tax (GST) in 2017. With Diwali just weeks away, the decisions taken at this meeting could directly impact consumer sentiment and trigger a major boost in demand.

GST 2.0: A New Structure on the Horizon

According to officials, the GST Council is preparing to introduce GST 2.0, a revamped version of the current tax system. The biggest expected change is a reduction in the number of tax slabs from four to two.

Currently, GST has four main slabs—5%, 12%, 18%, and 28%. Under the proposed reform, only 5% and 18% slabs will remain, while the 12% and 28% categories are likely to be scrapped.

Sources indicate that an additional 40% slab may also be introduced specifically for “sin goods” and demerit products such as tobacco, cigarettes, and luxury items. This move is aimed at simplifying the tax structure while ensuring higher revenue collection from goods considered non-essential or harmful.

Government’s Push for Simplification

The meeting comes just two weeks after Prime Minister Narendra Modi, during his Independence Day speech from the Red Fort, hinted at “double celebrations” this Diwali. His remarks are being widely linked to the upcoming GST reforms.

A circular released by Arvind Srivastava, Ex-Officio Secretary of the GST Council, had already confirmed that the September 3-4 meeting would discuss crucial reforms. Ahead of the main session, a preliminary round of consultations between central and state officials was also held on September 2.

Expected Impact on Consumers and Businesses

Experts believe the introduction of GST 2.0 will stimulate both urban and rural consumption by streamlining taxes and reducing the burden on essential goods. The simplification of slabs is expected to cut down compliance complexities for businesses while offering price stability for consumers.

Political analyst Ayush Nambiar described the move as transformative, saying:
“Before GST, India’s tax system was like a travelling circus—every state had its own rules, every border a new checkpoint. GST brought uniformity, turning a fragmented market into one. Now, GST 2.0 could be the next revolution, strengthening India’s single economic identity.”

Why This Matters Before Diwali

The timing of these decisions is critical. Diwali is one of India’s biggest shopping seasons, with demand surging for electronics, automobiles, fashion, and consumer goods. A simplified GST structure could reduce costs, encourage higher spending, and give the economy a festive-season boost.

In August 2025, GST collections rose 6.5% year-on-year, touching ₹1.86 lakh crore. A streamlined system is expected to further increase compliance and collections in the months ahead.

Key Takeaways from the September GST Council Meeting

• GST slabs may be cut from four to two (5% and 18%)

• The 12% and 28% slabs could be abolished

• A new 40% slab for sin goods like tobacco and luxury products is under consideration

• Reforms aim to boost consumption and simplify compliance

• Decisions could provide a pre-Diwali push to the economy

Conclusion

The September 3-4 GST Council meeting is being seen as a landmark moment for India’s taxation system. If approved, GST 2.0 will not just simplify the tax structure but also provide a much-needed stimulus to the economy ahead of the festive season. For businesses, consumers, and policymakers alike, these reforms could mark the beginning of a new chapter in India’s tax history.