On Independence Day this year, Prime Minister Narendra Modi stood at the Red Fort and offered Indians a different kind of freedom pledge: liberation from the country’s notoriously tangled tax code. However, the question which haunts most Indians, businessmen and consumers alike, is, will this ambitious plan to slash rates for India’s GST tax really bring about a truly “Good and Simple Tax”?

At the same time, more serious analysts are asking aloud, ‘Did the government choose a year when the global trade architecture is already being redrawn under the assault of Trump tariffs to rework its own goods tax regime, as it intends to come up with sharper import duty give-aways than previously announced and wants to lower taxes for domestic players in anticipation?’

Modi’s announcement, framed as a “Diwali gift” to households, small entrepreneurs and microenterprises, is, on paper, the most ambitious restructuring of India’s Goods and Services Tax since its introduction in 2017.

Come October, if the rollout proceeds as planned, five separate tax slabs will collapse into a seemingly simpler two-tier system—5 per cent and 18 per cent—with a punitive 40 per cent reserved for alcohol, tobacco and other so-called “sin goods”.

The government’s pitch is straightforward: fewer rates, less paperwork, cheaper goods, faster growth.

The timing is deft. With elections looming in several states and consumer demand sluggish, the reforms are calibrated to speak both to households struggling with inflation and to small businesses burdened by compliance.

However, beneath the celebratory framing lie risks that could test both India’s fiscal stability and the political capital the Prime Minister has staked on the bold plan.

Why Reform and Why Now?: For years, economists and........

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