The ‘next-gen’ Goods and Services Tax (GST) reforms that are due to roll out from September 22 will inject ₹2 lakh crore into the economy, said Union Finance Minister, Nirmala Sitharaman, on Wednesday.
At the Outreach and Interaction Program on Next Gen GST Reforms in Vishakhapatnam, the minister said there will be enough money for people to have more cash in hand, which would have otherwise gone as taxes.
The GST Council, which the minister said “is a prime example of cooperative federalism”, having been the only constitutional body created since independence, held a meeting on September 3 in which it decided on a complete rejig of the current Goods and Services Tax (GST) system.
The Council’s reforms included the axing of two of the four tax slabs – the 12 per cent and the 28 per cent slabs – to retain only the 5 per cent and the 18 per cent tax category.
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As per the new rules, nearly 99 per cent of all essential goods which previously fell in the 12 per cent slab have been moved to the 5 per cent category, said the minister. Similarly, 90 per cent items under the 28 per cent tax slab were now in the 18 per cent bracket, she added.
"With this new gen tax regime, with only two slabs (5 per cent and 18 per cent), ₹2 lakh crore is injected into the economy. People will have cash in hand," she said.
Several companies, including some FMCG giants, have already coming forward to offer rate cuts and pass on the benefits to consumers before the September 22 deadline of the implementation of the new GST regime, Sitharaman informed.
Talking about the significance of the GST system, the minister said that the GST revenues grew to ₹22.08 lakh crore in 2025 from ₹7.19 lakh crore in 2018 (FY 2017-18) while the total number of taxpayers grew to 1.51 crore from the earlier 65 lakh.
Flaying the previous UPA regime, she said the earlier tax structure was “tax terrorism” and that the NDA government had undertaken intensive work to implement GST as part of ‘one nation-one tax’ mission.
The Centre, said the minister, kept five filters when restructuring the GST – reduction of rates for the poor and the middle class, fulfilling aspirations of the middle class, benefiting the farmer community, being pro-MSME and sectors that are useful for the country in creating jobs and export potential.
“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.
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