Visakhapatnam: Union Finance Minister Nirmala Sitharaman on Wednesday said the next-generation GST reforms will inject Rs 2 lakh crore into the economy, leaving more cash in the hands of citizens that would have otherwise been paid as taxes.
Addressing the Outreach and Interaction Program on Next-Gen GST Reforms, she highlighted that 99 percent of goods previously under the 12 percent GST slab have been moved to a five percent rate. Similarly, 90 percent of items in the 28 percent tax bracket have been reduced to 18 percent.
Several companies, including FMCG giants, have voluntarily implemented rate cuts to pass on benefits to consumers even before the September 22 rollout of the new GST regime.
“With this new-generation tax regime, with only two slabs — 5 percent and 18 percent — Rs 2 lakh crore will be injected into the economy. People will have cash in hand,” she said.
Sitharaman explained that before revising rates, the NDA government applied five filters: reduction of rates for the poor and middle class, fulfilling middle-class aspirations, benefiting the farming community, supporting MSMEs, and promoting sectors that generate jobs and boost exports.
She also noted that GST revenues rose to Rs 22.08 lakh crore in 2025 from Rs 7.19 lakh crore in 2018 (FY 2017-18), and the number of taxpayers grew from 65 lakh to 1.51 crore.
The Finance Minister described the GST Council as a prime example of cooperative federalism, the only constitutional body created since independence.
Flaying the previous UPA government, she described earlier tax structures as “tax terrorism” and said that GST’s implementation was a significant exercise under the principle of one nation, one tax.
“The UPA government went on for 10 years. They could not implement GST or convince the states. I could have given a harsh political reply, but not today,” she said.
The revised GST slabs will come into effect from September 22, reducing the rates from four (5, 12, 18, and 28 percent) to just two (5 and 18 percent).
With PTI inputs