GST Reforms Added Rs. 2 Lakh Crores to the Indian Economy, Says India’s Finance Minister

New GST Reform’s Simplified Tax Structure will Boost the Indian Economy, Remarks Nirmala Sitharaman

On Wednesday, the Finance Minister of India, Nirmala Sitharaman, said that the new Goods and Services Tax reform will put Rs. 2 lakh crore back into the hands of common Indian citizens. She further highlighted that this move might lead to higher discretionary spending, which means that Indians who previously spent only on necessities will now be able to spend on non-essential things.

What Is the New GST Reform?

Nirmala Sitharaman mentioned that the simplified tax structure will significantly boost the Indian economy in the upcoming years and benefit consumers across the country. She shared this at an Outreach and Interaction Program on Next-Gen GST Reforms, which took place shortly after the announcement of the new GST reform set to be implemented from 22 September.

This reform has changed India's direct tax landscape by shrinking its four-slab structure to just two slabs. Previously, the four slabs involved a GST rate of 5%, 12%, 18%, and 28% based on the category of goods and services.

However, the new slabs come with a merit rate of 5% and a standard rate of 18%. Additionally, a special de-merit rate of 40% applies to luxury goods and products that are harmful to society and health.

The Indian Finance Minister added that the GST reform has resulted in immense growth since its inception by stating figures such as total revenue increasing from Rs. 7.19 lakh crores in 2018 to Rs. 22.08 lakh crores in 2025.

Sitharaman also shared that 99% of goods and services, which were previously under the 12% GST slab, have been shifted to 5% and that this restructuring is intended to benefit the middle class and decrease the cost of necessary goods.

Companies Voluntarily Started Implementing Rate Cuts

Many FMCG companies are proactively implementing rate cuts and offering consumers early benefits. The Indian government is also currently tracking price modifications for around 400 product categories.

This new GST reform mainly focuses on offering special benefits to farmers, reducing prices for poor and middle-class people, facilitating MSMEs, and promoting business sectors that create job opportunities and have export capabilities. Nirmala Sitharaman ended her speech by referring to the GST council as “a prime example of cooperative federalism.”