Finance Minister Nirmala Sitharaman on Wednesday said the next-generation GST reforms will infuse Rs 2 lakh crore into the Indian economy, and people will have cash in hand due to lower taxes. She added
that several companies are coming forward to pass on the GST cut benefit to consumers even before September 22, the date when the new GST rates kick in.
“With this new gen tax regime, with only two slabs (5 per cent and 18 per cent), Rs 2 lakh crore is injected into the economy. People will have cash in hand,” she said. Sitharaman was addressing the Outreach and Interaction Programme on Next Gen GST Reforms.
She also said that following the tax reforms, 99 per cent of goods under the 12 per cent GST slab have moved to five per cent. The rejig has resulted in 90 per cent items under 28 per cent tax slab slipping into the 18 per cent bracket.
Sitharaman on Wednesday said that before undertaking the rate rejig, the NDA government kept five filters – reduction of rate for poor and middle class, fulfilling aspirations of middle class, benefiting farmers community, pro-MSME and sectors that are useful for the country in creating jobs and export potential.
The minister highlighted that the GST revenues grew to Rs 22.08 lakh crore in 2025 from Rs 7.19 lakh crore in 2018 (FY 2017-18).
According to Sitharaman, the taxpayer’s number grew to 1.51 crore from the earlier 65 lakh.
Sitharaman said the GST Council is a prime example of cooperative federalism, noting it is the only constitutional body created since independence.
Flaying the previous UPA regime, she described the earlier tax structures as “tax terrorism” and said a lot of exercise went into the implementation of GST as part of one nation-one tax.
“The UPA government went for 10 years. You could not come with GST. You could not convince the states about GST… I could have given a harsh political reply. But not today,” she said.
The restricted GST rate slabs will come into effect from September 22. The GST council has reduced rate slabs from four ( 5, 12, 18 and 28) to just two (5 and 18 per cent).
On September 3, the GST Council, chaired by Sitharaman, in its 56th meeting slashed rates on several items ranging from daily-use products like shampoo and hair oil to automobiles and televisions. The council also simplified the structure to three slabs — 5%, 18% and 40%.
UHT milk, paneer, khakhra, pizza bread, roti and parathas have been exempted from GST altogether. Butter, ghee, cheese, condensed milk, jams, sauces, soups, pasta, namkeens and confectionery items will now be taxed at just 5%, down from 12-18%. Dry fruits such as almonds, cashews, pistachios, dates, figs and citrus fruits have also seen levies cut to 5%.
(With PTI Inputs)
