By Rahul Renavikar

On Independence Day last week, Prime Minister Narendra Modi announced that there will be a bonanza for consumers this Diwali as he intends to unleash long-awaited goods and services tax (GST) 2.0 reforms. While this announcement was expected to be made by the finance minister, who is the chairperson of the all-powerful GST Council, it surprised many that the PM chose to do so even before a formal approval from the council had been obtained. No doubt, the next GST Council meeting scheduled in September would take up the issue. In the mean time, it will be interesting to see the political reactions to the PM’s announcement as every political party will pounce on the opportunity to take credit.

According to the announcement and subsequent reports in the press, the complex multi-rate GST structure that prevails currently is proposed to be replaced by a simple two-rate structure (with an additional special rate of 40%). The GST rate slabs proposed to be retained are 5% and 18%, while the 12% and 28% rates would be done away with completely. The stock markets have already given the thumbs up to these announcements, notwithstanding the adversities on account of the additional tariffs imposed by the US.

Right from the inception of the GST in 2017, policymakers, tax experts, etc. were all of the firm view that its rate structure (running into double digits along........

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