Sitharaman: GST Overhaul to Boost Economy, Benefit Middle Class and MSMEs
GST 2.0: Addressing an outreach and interaction program on next-generation GST reforms, Finance Minister Nirmala Sitharaman said that after these reforms, the tax rate on 99 percent of items under the 12 percent GST slab has been reduced to five percent. Meanwhile, 90 percent of items under the 28 percent tax slab have been moved to the 18 percent tax slab. Let's explore this in detail.
Future-generation GST reforms will pump ₹2 lakh crore into the economy. This will place more money in the hands of people, money that hitherto was paid as taxes. Union Finance Minister Nirmala Sitharaman stated this on Wednesday.
Addressing an outreach and interaction programme on next-generation GST reforms, Finance Minister Nirmala Sitharaman said that after these reforms, the tax rate on 99 percent of items under the 12 percent GST slab has been reduced to five percent. Meanwhile, 90 percent of items under the 28 percent tax slab have been moved to the 18 percent tax slab.
She said that many companies, including some FMCG giants, are voluntarily coming forward to reduce rates and pass on the benefits to consumers even before September 22, when the new GST system is scheduled to come into effect.
She said, "This new-generation tax system, which has only two slabs (5 percent and 18 percent), will inject ₹2 lakh crore into the economy. People will have cash in their hands." She stated that the NDA government considered five aspects before revising the rates: reducing rates for the poor and middle class, meeting the aspirations of the middle class, benefiting the farming community, promoting MSMEs, and sectors that contribute to job creation and export potential in the country.
The minister noted that GST revenues increased from ₹7.19 lakh crore in 2018 (financial year 2017-18) to ₹22.08 lakh crore in 2025. According to Sitharaman, the number of taxpayers increased from 6.5 million to 15.1 million.
Sitharaman stated that the GST Council is a prime example of cooperative federalism and the only constitutional body formed since independence. Criticizing the previous UPA government, she described the earlier tax structures as "tax terrorism" and said that the implementation of GST, as part of the "One Nation, One Tax" initiative, was too laborious.
"The UPA government lasted for 10 years. You couldn't bring in GST. You couldn't convince states about GST... I could have given a tough political answer. But not today," she said. The restricted GST rate slabs will come into effect from September 22. The GST Council has reduced the rate slabs from four (5, 12, 18 and 28) to just two (5 and 18 percent).
