Prime Minister Narendra Modi on Wednesday welcomed the introduction of the new two-tier Goods and Services Tax (GST) structure, set to take effect from September 22.
In a post on X, the PM Modi said, "During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST.
The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy."
Modi noted that the GST Council, which includes representatives from both the Union and state governments, has given its collective approval to the proposals.
"Glad to state that @GST_Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth.
The wide ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses," he said.
India is set to slash taxes on hundreds of consumer products, including soaps and small cars, to boost domestic demand amid pressure from US tariffs, two state ministers said on Wednesday.
{{/usCountry}}India is set to slash taxes on hundreds of consumer products, including soaps and small cars, to boost domestic demand amid pressure from US tariffs, two state ministers said on Wednesday.
{{/usCountry}}The move is part of the government’s “Next-Generation GST” reform initiative aimed at improving affordability, spurring consumption, and enhancing economic efficiency.
Political leaders across parties have begun reacting to the development.
Union home minister Amit Shah praised Modi for delivering what he promised, saying, “PM Shri @narendramodi Ji stands for what he commits.”
In a post on ‘X’, he wrote, “This historic decision of GST rate cuts and process reforms will bring huge relief to the poor and middle class, while also supporting farmers, MSMEs, women and youth.”
Shah added, “By simplifying the system and reducing the burden on common citizens, these reforms will not only ensure ease of living but also give a big boost to ease of doing business, especially for small traders and entrepreneurs. A truly transformative decision for Bharat!”
Andhra Pradesh chief minister N Chandrababu Naidu said, “We welcome the GST reforms with revised slabs across daily essentials, education, healthcare, and agriculture. This pro-poor, growth-oriented decision will benefit all sections of society, from farmers to businesses. I congratulate Hon’ble Prime Minister Shri Narendra Modi Ji and Union Finance Minister Smt. Nirmala Sitharaman Ji on this transformative step.”
“As announced by PM Modi Ji on Independence Day, these next-generation GST reforms mark a strategic and citizen-centric advancement of our tax framework, ensuring a better quality of life for every Indian,” he added.
GST slabs consolidated into dual rate structure
Finance minister Nirmala Sitharaman on Wednesday announced a major overhaul of the GST framework, consolidating the existing 12% and 18% slabs into a simplified dual rate structure of 5% and 18%, along with a 40% levy on sin goods.
“In common man and middle class items, there is a complete reduction. This reform is not just about rationalising rates. It's also on structural reforms. It's also about ease of living, so that businesses can conduct their operations with the GST with great ease. We've reduced the slabs. There shall be only two slabs, and we are also addressing the issues of compensation cess,” Sitharaman said at a late evening press conference.
“These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has undergone a rigorous review, and in most cases, the rates have come down drastically. Labour-intensive industries have been given good support. Farmers and the agriculture sector, as well as the health sector, will benefit,” she added.