Finance Minister Nirmala Sitharaman announced that reducing GST rates on essential goods and services could boost the economy by Rs 2 lakh crore. Approximately 99% of products formerly taxed at 12% have been cut to 5%, and about 90% of items previously at 28% now fall into the 18% category. This measure is designed to increase consumer demand and stimulate economic growth.
The Finance Minister announced that the streamlined GST system, with only two rates, 5% and 18%, will inject Rs 2 lakh crore into the economy, directly enhancing consumers’ spending capacity.
Before the GST rate adjustments on September 22, many companies, including top FMCG brands, are proactively lowering their prices to provide early advantages to consumers, the minister stated.
Finance Minister Nirmala Sitharaman dismissed claims of weak demand, noting GST cuts on over 375 products will boost consumer spending. She will monitor from September 22 if companies pass savings to buyers.
The GST Council recently simplified the tax structure by reducing slabs to 5% and 18%, with a 40% rate for sin goods, removing 12% and 28% tiers to ease taxes and benefit consumers.
The minister stated that the GST reforms aim to support the poor and middle class, farmers, small businesses, and job creators, while also enhancing exports.
GST revenue increased from Rs 7.19 lakh crore in FY18 to Rs 22.08 lakh crore in FY25, despite Covid-related challenges. The number of taxpayers more than doubled, reaching 15.1 million. The government forecasts recovering the Rs 48,000 crore revenue loss caused by recent rate cuts through increased spending this year.
At the CII GCC Summit in Visakhapatnam, Sitharaman stated that Global Capability Centres are crucial for fostering growth, enhancing competitiveness, and developing skills.
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Sitharaman stressed the need for national and state policies to work together, helping each state use its strengths. She urged developing smaller cities to attract talent, investment, and innovation, with the central government supporting states in building capacity and infrastructure.
