Diwali GST Reform 2025 – Will PM Modi’s Slab Overhaul Truly Be a Festive Gift?
- Stay Informed With Sanil | Sanil Pinto
- Aug 16
- 3 min read
The Diwali GST Reform 2025 is shaping up to be one of the most significant indirect tax changes since GST’s introduction in 2017. Prime Minister Narendra Modi has hinted at a “next-generation” reform that could simplify India’s tax structure, cut costs for households, and potentially make Diwali shopping lighter on the pocket.
Key Highlights of the Diwali GST Reform 2025
Two-slab structure: Proposal to simplify GST rates into just 5% and 18%, replacing the current multi-tier system.
Major cuts: Nearly 99% of goods in the current 12% slab may move to 5%, while ~90% of 28% items may shift to 18%.
Higher sin tax: A possible 40% GST on items like tobacco, online gaming, and luxury products.
Festive savings: Estimates suggest households could save ₹8,000–₹10,000 on typical Diwali purchases.
Timeline: Proposal expected in the September 2025 GST Council Meeting, with rollout likely by Diwali
Proposals Under the Diwali GST Reform 2025 – What’s Still Pending
Change | Proposal | Source | Status |
Two-slab GST (5%, 18%) | Proposed to GST Council GoMs | PIB | Under consideration |
99% of 12% items → 5% | Pending GoM review | Economic Times | Likely |
90% of 28% items → 18% | Rate restructuring proposal | CNBC-TV18 | Likely |
40% GST on sin goods | Tobacco, gaming | Media reports | Possible |
Insurance GST cut | From 18% → 5% or nil | Times of India | Unconfirmed |
GST Council meeting | Sept 2025 | India Today | Scheduled |
Impact of the Diwali GST Reform 2025 on Consumers
Current vs Proposed Slabs
12% → 5%: Packaged foods, apparel, kitchenware → significant household savings.
28% → 18%: TVs, ACs, washing machines → reduced appliance costs.
28% + Cess → 40%: Tobacco, luxury goods → higher tax burden.
Estimated Household Savings
Household items: ~₹359 saved on ₹4,500 spend.
Electronics: ~₹6,952 saved on ₹1,25,000 spend.
Services: ~₹1,574 saved on ₹26,000 spend.
👉 Total festive saving: ~₹8,884 on a ₹1,55,500 spend.
Who Might Face the 40% Sin Tax in the Diwali GST Reform 2025?
Confirmed in discussions: Tobacco, online gaming.
Possibly included: Pan masala, aerated drinks, luxury cars, high-end cosmetics.
Wider Economic Impact of the Diwali GST Reform 2025
Short-term revenue dip may be offset by higher consumption.
Simplified slabs reduce compliance stress for MSMEs.
States may seek cess adjustments to protect revenues.
Timeline for the Diwali GST Reform 2025
August 2025: Proposal before GoMs.
September 2025: GST Council deliberations.
October–November 2025: Potential rollout aligned with Diwali.
The Bottom Line – What the Diwali GST Reform 2025 Means for You
The Diwali GST Reform 2025 could transform India’s indirect tax framework if approved. From household goods to electronics, consumers may see real festive savings, while businesses benefit from a simpler structure. However, until the GST Council’s approval, these remain proposals.
Are you expecting real festive savings from the Diwali GST Reform 2025, or do you think higher sin taxes will offset the benefits? Share your thoughts in the comments and let’s discuss.
About The Author:
Sanil Pinto - Stay Informed With Sanil
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Disclaimer
This article is for informational purposes only and does not constitute investment advice. Investing in shares carries significant risk, including loss of capital, illiquidity, and valuation uncertainty. Readers are strongly encouraged to consult a SEBI-registered financial adviser before making any investment decisions. The information provided is based on publicly available data and sources believed to be reliable as of the date indicated, but may change without notice.
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