The Indian government is set to implement significant Goods and Services Tax (GST) reforms on September 22, 2025, aimed at simplifying the tax structure and enhancing affordability for small businesses and artisans. These changes are designed to streamline compliance, reduce costs, and foster growth in the informal and semi-formal sectors.
Key Highlights of the New GST Structure
Simplified Tax Slabs: The GST system is transitioning from a four-tier structure to a two-tier model, with rates set at 5% and 18%, and a 40% rate for select luxury items. This simplification aims to reduce compliance burdens and enhance transparency.
Targeted Reductions for Artisans: Products such as Shantiniketan leather goods, Darjeeling tea, and Purulia chhau masks will benefit from GST cuts, empowering artisans and small businesses in regions like West Bengal.
Lower GST Rates on Handicrafts: Handcrafted items, including candles, carved wood products, hand-woven textiles, pottery, and various art forms, will now attract a 2.5% GST, with silver filigree work and handmade imitation jewellery taxed at 1.5%.
Benefits for Small Businesses and Artisans
Reduced Tax Burden: Lower GST rates on raw materials and finished goods will decrease the overall tax burden, making products more affordable for consumers and improving margins for producers.
Enhanced Market Access: With simplified tax structures and reduced rates, small businesses and artisans can more easily access broader markets, both domestically and internationally.
Increased Competitiveness: The reforms aim to level the playing field, allowing small enterprises to compete more effectively with larger firms by reducing operational costs.
Implementation and Support
Effective Date: The new GST rates and structures will come into effect on September 22, 2025.
Government Initiatives: The government has issued detailed FAQs and guidelines to assist businesses in transitioning to the new system, ensuring a smooth implementation process.
Sector-Specific Support: Programs like PMEGP and SFURTI continue to support training, marketing, and modernization efforts, particularly benefiting artisan clusters such as the Kashi Pottery Cluster.
FAQs
Q1: What are the new GST rates for small businesses and artisans?
The new GST rates are 5% and 18%, with a 40% rate for select luxury items. Handcrafted goods will attract a 2.5% GST, and silver filigree work and handmade imitation jewellery will be taxed at 1.5%.
Q2: When will these changes take effect?
The new GST structure will be implemented on September 22, 2025.
Q3: How can small businesses prepare for the new GST system?
Businesses should review the updated GST guidelines, adjust pricing strategies accordingly, and ensure compliance with the new tax rates.
Q4: Will these reforms benefit all small businesses?
Yes, the reforms are designed to simplify the tax structure, reduce costs, and enhance market access, benefiting small businesses across various sectors.
Q5: Are there any exemptions under the new GST structure?
Certain luxury goods will remain under the higher 40% tax slab. It's important to review the updated GST guidelines for specific exemptions.
Published on : 19th September
Published by : SMITA
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