<h1>Government to simplify GST with two main rates, special 40% on select goods, and faster compliance by Diwali</h1> The government announced a comprehensive overhaul of the Goods and Services Tax (GST) system to be implemented by Diwali, replacing the existing multiple tax slabs with two main rates of 5% and 18%, plus a special 40% rate for select demerit goods. Essential items like food, medicines, and education will remain tax-exempt, while most goods currently taxed at 12% will shift to 5%. Electronics and many luxury goods will move to the 18% bracket. Tobacco and similar products will maintain a combined tax incidence of 88% through a separate levy. Petroleum products and alcohol remain outside GST. The reform aims to simplify compliance, reduce litigation, and boost consumption despite potential short-term revenue losses. Measures include faster registration, pre-filled returns, and resolution of inverted duty structures. The proposal awaits approval from a group of ministers and the GST Council before final implementation.