New Delhi: In a landmark economic reform, the Modi government has overhauled the Goods and Services Tax (GST) regime, replacing the earlier multi-slab structure with just two simple slabs of 5% and 18%.

The move, hailed as one of the biggest tax simplifications since the rollout of GST in 2017, aims to make the system more transparent and business-friendly. Officials said it would ease compliance for small traders and industrialists while reducing the overall tax burden on consumers.

“This reform not only simplifies the tax system but also directly benefits farmers, artisans, and small-scale industries across India,” a senior government source said.

Karnataka, Kerala, Tamil Nadu among biggest gainers

In Karnataka, traditional sectors such as Mysore silk, Ilkal and Molakalmuru silks, Channapatna and Kinnal toys, and sweets like Mysore Pak and Dharwad peda now fall under the 5% slab. Agricultural products including cardamom, black pepper, coffee, oranges, pomegranates, and Nanjanagudu rasabale bananas have also become cheaper.

Kerala’s hallmark produce — Alleppey green cardamom, Malabar black pepper, Wayanad coffee, and coir products — now attract a 5% tax, boosting local agriculture and handicraft industries.

In Tamil Nadu, the textile sector, Virupakshi hill bananas, Erode turmeric, Thanjavur paintings, and Arumbavur wood carvings have all been placed in the 5% slab, improving competitiveness for artisans and farmers.

Nationwide relief for local industries and handicrafts

The reform is expected to bring relief across multiple states:

  • Maharashtra: Kolhapuri chappals, Paithani sarees, Warli paintings, Alphonso mangoes, and food processing units now enjoy a 5% rate.
  • Uttar Pradesh: Sports goods, handloom, and leather industries benefit, creating jobs for youth and strengthening MSMEs.
  • Gujarat: Textile and diamond sectors get major relief, reducing production costs and boosting exports.
  • Punjab & Haryana: Phulkari, dairy, mustard oil, and agricultural machinery now taxed at 5%, supporting rural industries.
  • Odisha & Chhattisgarh: Dokra art, silver filigree, Bastar iron craft, and agricultural produce see lower taxes.
  • Himachal Pradesh & Uttarakhand: Kullu shawls, Kangra tea, bay leaves, rajma, and local handicrafts all move to the 5% bracket.
  • Jammu & Kashmir and Ladakh: Kashmiri Pashmina, saffron, walnuts, cherries, Thangka paintings, and wood carvings benefit from the reduced rate.

Boost to Make in India and rural economy

The simplified GST is expected to give a significant push to the government’s Make in India and Vocal for Local initiatives. Reduced tax rates on traditional goods, farm produce, and handicrafts will help small producers expand markets, increase exports, and generate employment.

“The reform reflects the government’s commitment to Sabka Saath, Sabka Vikas, Sabka Vishwas, and Sabka Prayas. It strengthens the link between tradition and trade,” a Finance Ministry statement said.

Economic experts hail reform as ‘game-changer’

Economists have called the dual-slab GST a “historic simplification”, predicting higher compliance, lower evasion, and faster growth in small and medium industries.

With this, India’s GST regime moves closer to global best practices — a step that industry bodies say will make doing business easier and enhance competitiveness in domestic and export markets alike.