Speaking in Visakhapatnam on Wednesday, Finance Minister Nirmala Sitharaman announced that the upcoming GST reforms are set to empower ordinary citizens by injecting a substantial ₹2 lakh crore directly into their hands.
During an address in Visakhapatnam, the Finance Minister emphasized that the GST Council’s decision is strategically designed to lighten the financial load on consumers and boost the overall liquidity within the nation’s economy.
Highlighting GST as a universal tax affecting every Indian, she explained that the Central Government has introduced ‘GST 2.0’ to streamline and simplify the existing, often complicated, tax structure.
She further elaborated that a thorough review of taxes on essential daily items has led to significant rate reductions under the new GST 2.0, which will come into effect from September 22. This announcement was made during an outreach program focused on these next-generation reforms in Visakhapatnam.
Under GST 2.0, effective September 22, the existing five tax slabs (0%, 5%, 12%, 18%, and 28%) will be condensed into just two: 5% and 18%. This means common consumer goods will fall under the 5% category, while other items will be taxed at 18%. Specifically, taxes on household essentials like soaps and toothpaste have been drastically reduced to five per cent or even zero, significantly improving affordability. Lifesaving drugs, previously at 12%, will now be taxed at five per cent or nil. Furthermore, items like two-wheelers, cars, televisions, and cement will see their rates drop from 28% to 18%, offering considerable relief to the middle class.
The Union Minister highlighted that a remarkable 99% of goods currently taxed at 12% GST will now transition into the more accessible five per cent slab under the new framework. This change is poised to deliver widespread benefits to both the middle class and the economically disadvantaged throughout the nation.
Ms. Sitharaman attributed the success of various welfare schemes and infrastructural advancements, including new roads, airports, and Vande Bharat trains, to GST revenues. She noted a substantial increase in GST collections, from ₹7.19 lakh crore in 2018 to an impressive ₹22.08 lakh crore by 2025. Additionally, the taxpayer base has grown significantly, from 65 lakh to 1.51 crore.
The Union Government expresses optimism that these new GST reforms will stimulate increased consumer spending, making goods and services more affordable by leaving more disposable income with the public.
Ms. Sitharaman reaffirmed that this latest GST overhaul, the most significant since the ‘One Nation – One Tax’ system was introduced on July 1, 2017, has been enacted with the primary goal of benefiting the common man.