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Current Edge Daily Brief 5th September 2025
Quote of the Day
“I stand as witness to the common lot, survivor of that time, that place.” – ANNA AKHMATOVA
What the Others Say
“Israel is walking with eyes open into a steady expanding disaster. The war in Gaza has crossed all bounds of reason, from both the military and the humanitarian perspective.” – HAARETZ, ISRAEL
Table of Contents
THE BIG PICTURE
- IE Explained: GST rate changes: Why was this done, who is impacted how, explained in 5 points
NEWS IN SHORT
- Teacher’s Day 2025
- Centre-Manipur-Kuki Agreement & NH-2 Opening
The Big Picture
IE Explained: GST rate changes: Why was this done, who is impacted how, explained in 5 points
Syllabus: Pre/Mains – Economy
Why in News?
GST Council approved major tax reforms on September 3, 2025, simplifying four-tier structure to mainly two slabs with new rates effective from September 22 (Navratri).
What Changed in GST Structure?
- Four slabs reduced to two main slabs: 5% (merit rate) and 18% (standard rate) replacing earlier 5%, 12%, 18%, 28% system
- New 40% luxury/sin tax introduced: High-end cars, tobacco, aerated beverages, premium bikes face highest taxation
- Daily essentials moved to lower brackets: Hair oil, shampoo, butter, cheese, nuts, packaged food shifted from 12%/18% to 5%
- Electronics become cheaper: TVs, ACs, refrigerators reduced from 28% to 18%; small cars and bikes below certain limits also at 18%
- Some items become tax-free: Personal health/life insurance, exercise books, notebooks moved to 0% from 18%/12%
Who Benefits Most?
- Middle-class families: Significant savings on daily consumables, electronics, small vehicles
- Small car/bike buyers: Vehicles under 1200cc/350cc respectively taxed at 18% instead of 28%
- Construction sector: Cement rates drop from 28% to 18%, reducing building costs
- Agriculture sector: Tractors, irrigation equipment moved to 5% from 12%
- Hotel industry: Accommodations up to Rs 7,500 taxed at 5% instead of 12%
Government Revenue Impact
- Expected revenue loss: Rs 48,000 crore annually due to rate reductions
- Consumption boost strategy: Lower prices expected to increase demand and overall economic activity
- Virtuous growth cycle: More spending → higher production → more employment → increased consumption
- Long-term gain expectation: Revenue losses compensated by expanded tax base and economic growth
- Timing consideration: Pre-Diwali implementation to maximize festive season consumption
Economic Logic Behind Changes
- Demand stimulation: Cheaper goods leave more money in consumer pockets for additional spending
- Tax simplification: Two-tier system reduces compliance burden and classification disputes
- Formalization push: Simplified structure encourages more businesses to join formal economy
- Anti-luxury measure: 40% rate discourages consumption of harmful/luxury products while generating revenue
- Political timing: Festive season launch ensures maximum visibility and consumer appreciatios
News in Short
Teacher’s Day 2025
Why in News?
September 5, 2025 marks Teacher’s Day in India, celebrated annually to honor Dr. Sarvepalli Radhakrishnan’s birth anniversary, India’s second President and renowned educator.
Key Points:
- Historical Significance: India has celebrated Teacher’s Day on September 5 since 1962 to honor Dr. Radhakrishnan, a distinguished philosopher, teacher, and scholar
- PM’s Tribute: Prime Minister Modi greeted teachers nationwide, stating that “the dedication of teachers to nurturing minds is the foundation of a stronger and brighter future”
- National Recognition: President Droupadi Murmu will confer National Awards to Teachers to 46 selected awardees on this occasion
- Global Difference: While India celebrates Teacher’s Day on September 5, World Teachers’ Day is observed on October 5 as per UNESCO, UNICEF, and ILO guidelines
Centre-Manipur-Kuki Agreement & NH-2 Opening
Why in News?
The Centre, Manipur government, and Kuki-Zo groups signed a landmark tripartite peace agreement on September 4, 2025, ending a two-year blockade of National Highway-2 amid ethnic violence that has plagued Manipur since May 2023.
Key Points:
- Suspension of Operations Renewed: A one-year tripartite Suspension of Operations (SoO) agreement was signed with revised ground rules, reaffirming Manipur’s territorial integrity
- Highway Reopens: National Highway-2, the vital supply route connecting Manipur with Nagaland and rest of Northeast, will reopen for free movement of commuters and essential goods after being blocked for over two years
- Camp Relocation: Seven designated militant camps will be relocated away from conflict-prone areas, with weapons transferred to nearest CRPF/BSF facilities for better oversight
- Peace Process: The agreement aims for a negotiated solution to restore lasting peace in Manipur, which has witnessed ethnic violence since May 2023, claiming over 260 lives and displacing 50,000 people
- PM Visit Context: This breakthrough comes ahead of Prime Minister Modi’s expected first visit to Manipur on September 12-13 since the ethnic violence began
