GST reforms to inject Rs 2 lakh cr into economy, says Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on Wednesday (September 17) said the GST reforms will infuse Rs 2 lakh crore into the economy, leaving people with more cash in hand that otherwise would have gone as taxes.

Addressing the Outreach and Interaction Programme on Next Gen GST Reforms, she said, following the tax reforms, 99 per cent of goods under the 12 per cent GST slab have moved to five per cent, and 90 per cent items under 28 per cent tax slab have slipped into the 18 per cent bracket.

According to Sitharaman, several companies including some FMCG giants are voluntarily coming forward to give rate cuts and pass on the benefit to consumers even before September 22, the implementation date for the new GST regime. The GST council has reduced rate slabs from four ( 5, 12, 18, and 28 per cent) to just two (5 and 18 per cent).

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'People will have more cash in hand'

The Finance Minister said, "With this new gen tax regime, with only two slabs (5 per cent and 18 per cent), Rs 2 lakh crore is injected into the economy. People will have cash in hand."

She said before undertaking the rate rejig, the NDA government kept five filters - reduction of rate for poor and middle class, fulfilling aspirations of middle class, benefitting the farmers' community, pro-MSME and sectors that are useful for the country in creating jobs and have export potential.

She also highlighted that the GST revenues grew to Rs 22.08 lakh crore in 2025 from Rs 7.19 lakh crore in 2018 (FY 2017-18), adding that the number of taxpayers grew to 1.51 crore from the earlier 65 lakh.

Also Read: Banks see spike in car loan cancellations ahead of GST rate cut rollout

'GST Council - example of cooperative federalism'

Sitharaman said the GST Council is a prime example of cooperative federalism, noting that it is the only constitutional body created since independence.

Flaying the previous United Progressive Alliance (UPA) regime, she described the earlier tax structures as “tax terrorism” and said a lot of exercise went into the implementation of GST as part of one nation-one tax.

“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.