The recently-introduced reforms in the Goods and Services Tax (GST) spell victory for every citizen of India who will be benefited by lowered prices of essentials, said Union Finance Minister, Nirmala Sitharaman, on Sunday.
At a joint conclave of the Trade and Industries Association in Chennai, where the minister spoke on ‘Tax Reforms for Rising Bharat’, she also explained the key initiatives of the reforms by which “99 per cent of all goods earlier taxed at 12 per cent have now been reduced to 5 per cent GST”.
“Each state in India has its own festivals, so it was decided to implement the GST reforms much ahead of Prime Minister Narendra Modi’s instructions of launching them by Diwali,” she said at the event, which was organised by the Chennai Citizens Forum and where the minister also released a book in English and Tamil that enumerates the benefits that Tamil Nadu will gain following the implementation of the GST reforms.
Earlier this month, during the 56th meeting of the GST Council, which is headed by the Finance Minister, the GST structure was redefined, simplified, and reformed. From the previous four-tier tax structure comprising the 5 per cent, 12 per cent, 18 per cent, and 28 per cent tax categories, two were slashed down, with only the 5 per cent and the 18 per cent tax slab remaining.
The tax rates have been brought down for over 350 items, most used on a day-to-day basis, and will be effective from September 22, 2025.
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"We have also simplified the procedure for the traders. There is no 28 per cent GST tax on any product," Sitharaman said, referring to the increase in tax base from traders of the country.
"Opposition party leader Rahul Gandhi had called the GST a ‘Gabbar Singh Tax’. But, after its levy in 2017, the number of businesses that were paying taxes has been increased from 66 lakh to 1.5 crore since they realised that they would benefit from it,” she stated.
With more businesses signing up to pay the GST, the Centre and states’ revenues is also set to increase, she added.
"In 2017, the tax collected was ₹7.19 lakh crore, and now, the gross GST collection has crossed ₹22 lakh crore. On an average, ₹1.8 lakh crore to 2 lakh crore worth revenue is collected by the Central and state governments. Further, if the revenue from the taxes is ₹1.80 lakh crore, it gets divided in half so the states get ₹90,000 crore and the Centre gets ₹90,000 crore. From the Centre’s shares of ₹90,000 crore, almost 41 per cent goes back to the states,” she said.
Regarding the classification of items, she said, there has been a major restructuring.
“For instance, the sale of salted popcorn would attract a tax of 5 per cent if sold in the 'Namkeen' category; while sweetened popcorn was taxed at 18 per cent. But, there was no tax on popcorn sold on the roadside,” the minister said, adding that as per the latest reforms, all food products either come under the 5 per cent tax slab or no tax at all.
"It has been simplified. Now, all food products come under the 5 per cent tax slab or under no tax. So, there is no problem of classification anymore.”
To expedite the Prime Minister’s vision of ‘Viksit Bharat’, Sitharaman said she expected businesses to welcome this move.
"In fact, many companies like Hindustan Unilever Ltd and Godrej have assured me that they will pass on the benefit to the public," she said.
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