GST reforms to ease tax burden, boost growth: FM Sitharaman

New Delhi: Finance Minister Nirmala Sitharaman on Sunday said the new Goods and Services Tax (GST) reforms, which came into effect on Monday, will benefit the poor, middle class, youth, farmers, women, shopkeepers and entrepreneurs.

She said the rationalization of rates to 5 per cent and 18 per cent would encourage local manufacturing while strengthening cooperative federalism. “We should all work to accelerate growth, make it easy for business to function and be attractive for investment. Such a big tax reform became possible by taking all states together, since 2017,” Sitharaman said, referring to Prime Minister Narendra Modi’s address to the nation.

She criticized the opposition for spreading “negativity and baseless criticism” despite what she called a positive and forward-looking speech by the Prime Minister.

According to Sitharaman, the reforms have lowered the overall tax burden. Items earlier taxed at 12 per cent and 18 per cent have largely been shifted to the 5 per cent slab, while certain essentials are now exempt from tax. The move, she said, would benefit all 1.4 billion citizens.

A special 40 per cent bracket has also been introduced for products deemed harmful or excessively luxurious, such as tobacco, pan masala, soft drinks and high-end luxury cars.

The GST Council, which includes representatives from all states and union territories, approved the reforms unanimously. The Centre expects the simplified structure to cut the prices of essentials, boost consumption and stimulate the economy.

Modi said nearly 99 per cent of goods earlier in the 12 per cent category have been brought under the 5 per cent bracket. He added that the reform would make a wide range of essential and lifestyle products, from groceries and medicines to TVs, refrigerators, two-wheelers, cars and hotel stays, more affordable.