Increased Financial Support for Indians: An Estimated Rs 2 Lakh Crore Infusion into the Economy as Performed by Finance Minister Nirmala Sitharaman in Regards to GST 2.0
India is set to witness a significant change in its tax structure with the announcement of next-generation GST reforms by Finance Minister Nirmala Sitharaman. These reforms aim to inject Rs 2 lakh crore into the Indian economy and give consumers more money in their pockets through lower taxes.
Under the new GST structure, 90% of items previously under the 28% slab will now fall into the 18% bracket. This includes a wide range of everyday items such as butter, ghee, cheese, condensed milk, jams, sauces, soups, pasta, namkeens, and confectionery, which were previously taxed at 12-18%. These items will now have a reduced tax of 5%.
In addition, several other items have shifted from the 12% slab to the 5% slab. These include dry fruits like almonds, cashews, pistachios, dates, figs, and citrus fruits. Notably, UHT milk, paneer, khakhra, pizza bread, roti, and parathas have been exempted from GST.
The official implementation date of these reforms is September 22. Several companies are already passing on the benefits of the GST cut to customers ahead of this date, with Eicher Motors, the maker of Royal Enfield motorcycles, being one such example.
The Modi government's approach to the GST reforms focuses on benefiting the poor, meeting the aspirations of the middle class, supporting farmers, enabling MSMEs to create jobs, and boosting exports. The GST base has expanded to 1.51 crore taxpayers from 65 lakh, indicating a broader tax net.
Sitharaman made these remarks at the Outreach and Interaction Programme on Next Gen GST Reforms. According to S&P Global, India is expected to remain the world's fastest-growing major economy despite global uncertainty. The GST revenue in FY25 has increased to Rs 22.08 lakh crore from Rs 7.19 lakh crore in FY18, reflecting the success of these reforms.
The next-generation GST reforms will have only two slabs: 5% and 18%. This simplification is expected to further boost the economy and make tax compliance easier for businesses. With these reforms, India is taking a significant step towards a more tax-friendly and consumer-friendly economy.
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