Amidst the whimsical decision of President, Trump to impose a cumulative tariff of 50 percent on Indian imports to America effective from Aug 27,Prime Minister Narendra Modi’s decision to push for the most ambitious Goods and Services Tax (GST) reform since 2017 was not just an economic move; it is also deeply consumers’ oriented. By cutting levies on everyday goods, small cars, and consumer durables, Modi was addressing two pressing concerns simultaneously: cooling inflation at home and repairing India’s bruised trade posture abroad and proving fruitful in the wake of U.S. President Donald Trump’s aggressive tariff stance against India.

At one level, this is an economic reset. At another, it is a manoeuvre designed to consolidate middle-class support, give relief to consumers, and showcase India’s willingness to embrace reforms even amid fiscal stress. The real question, however, is what it will cost the Centre and, more importantly, the states.

From “One Nation, One Tax” to Complexity

When GST was introduced in 2017, it was projected as “one nation, one tax, one market.” More than a dozen state-level indirect taxes were swept away, creating a unified system. But the dream of uniformity soon collided with the reality of complexity. With four slabs—5%, 12%, 18% and 28%—plus cess on luxury goods, the system became fertile ground for disputes and anomalies.

Plain bread attracted just 5% GST, but the layered paratha was taxed at 18%. Buttered popcorn fell in one slab, caramelized in another. Such inconsistencies damaged public perception and gave GST a reputation for arbitrariness.

The Modi government now proposes to correct this anomaly by abolishing the 28% slab, which applied to cars, air-conditioners, refrigerators and consumer durables. Simultaneously, 99% of goods taxed at 12%—such as butter, fruit juices and dry........

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