Union Finance Minister Nirmala Sitharaman, while addressing the seminar “Next Generation GST Reforms” in Visakhapatnam, said the latest changes to the Goods and Services Tax (GST) are aimed at easing the burden on the middle class and the common man.
She announced that the new tax regime, set to roll out on September 22, 2025, is expected to inject nearly Rs 2 lakh crore into the economy by lowering consumer taxes. The reforms, she said, were designed with a focus on the everyday citizen, farmers, and small businesses.
FM explained how the GST 2.0 reforms simplified the existing tax structure. The earlier four-slab GST system of 5%, 12%, 18%, and 28% has been simplified to two major slabs — 5% for essentials and 18% for most other goods. The 12% and 28% brackets have been scrapped, with a new 40% rate for luxury and sin goods.
Nearly all products that earlier fell in the 12% slab — around 99% — have been shifted to the 5% slab. This covers household staples like toothpaste, shampoo, soaps, and packaged foods, cutting costs for families.
Taxes on middle-class aspirational purchases such as two-wheelers, small cars, air conditioners, and televisions have been reduced from 28% to 18%. This, she noted, will make such items more affordable and boost consumer spending.
GST on farm equipment and irrigation systems has been cut from 12% to 5%. Micro, Small, and Medium Enterprises (MSMEs) will also benefit from reduced costs and simplified compliance procedures.
Since GST’s launch in 2017, the taxpayer base has expanded significantly from 65 lakh to 1.51 crore, a clear sign, she said, of a more transparent and efficient tax regime.
Nirmala Sitharaman stressed that the reforms go beyond just rate reductions. “These changes are about building trust, spurring demand, and steering India toward its goal of Viksit Bharat (Developed India),” she said. She also highlighted that the GST Council, which includes representatives from every state, embodies cooperative federalism and that the reforms were the result of unanimous, collaborative decisions.
