PM Narendra Modi at the inauguration of ‘Uttar Pradesh International Trade Show 2025’, in Greater Noida, on Thursday.
Credit: PTI Photo
New Delhi: The process of goods and services tax (GST) reforms will continue and the tax rates would be lowered further as the economy strengthens, Prime Minister Narendra Modi said on Thursday, days after implementation of the next-generation reforms in the country’s indirect tax system.
Speaking at Uttar Pradesh International Trade Show 2025 in Greater Noida, the Prime Minister said the structural reforms in GST, which came into effect from September 22, would “give new wings to India’s growth story".
“In 2017, we introduced GST that strengthened the economy. And in 2025 we have brought (GST 2.0) again, will strengthen the economy again. As the economy strengthens, the tax burden will reduce,” Modi said.
“I want to tell you that we are not going to stop here,” the Prime Minister remarked, indicating further reforms and reduction in GST rates in the coming years.
The next generation reform of GST with significantly lower rates has been implemented from September 22. GST slabs have been rationalised to two major rates 5% and 18% from earlier four main slab rates of 5%, 12%, 18% and 28%. Majority of the items of daily households, including FMCG and durables, are now in the 5% GST bracket.
SBI Research said in a note that the reduction in GST tax rate and income tax relief announced in the Union Budget in February, will lead to a consumption boost of Rs 5.5 lakh crore.
“Today, by making income of Rs 12 lakh tax free and the new GST reform, the people of the country are going to save Rs 2.5 lakh crore this year. Rs 2.5 lakh crore will be saved in the pockets of the countrymen,” Modi said.
Meanwhile, Finance Minister Nirmala Sitharaman said India’s economy remains resilient because of the bold structural reforms introduced by the government.
She said the next generation GST reform has prioritised the common man.
“Amidst this uncertain global environment, India’s resilience stands out. Several favourable factors, such as strong macroeconomic fundamentals, a young demography and greater reliance on domestic demand, provide core strength to the Indian economy to withstand global spillovers and grow at a higher aspirational trajectory,” Sitharaman said at Bank of Maharashtra’s 91st Foundation Day event in Pune.
Referring to the recent upgrade of India’s sovereign ratings, the Finance Minister said it is the reflection of proactive fiscal and monetary policies, bold structural reforms, massive infrastructure creation and improved governance.
Global rating agencies S&P, Morningstar DBRS and Rating and Investment Information, Inc. (R&I) have upgraded India’s sovereign credit ratings recently citing strong domestic demand and fiscal discipline.