New Delhi: Union Finance Minister Nirmala Sitharaman announced on Saturday that the GST Council, which she heads, has approved a new and simplified tax structure. The move, described by Sitharaman as a “people’s reform,” is set to take effect from September 22, coinciding with the beginning of the Navratri festival.
The new tax framework will replace the previous four-tier structure of 5%, 12%, 18% and 28% with a streamlined two-tier system of 5% and 18%. Additionally, a new 40% slab has been introduced for so-called “sin goods” and luxury items.
In an interview with PTI, the Finance Minister addressed criticism from opposition parties, accusing them of “misleading the country” on the GST. She clarified that the original decision to have four tax slabs was not solely made by the BJP but was a consensus reached by the Empowered Committee of state finance ministers.
Reforms to Benefit Every Indian, Says Sitharaman
Sitharaman said the rationalization of GST rates is a step that will benefit all Indian families and is expected to boost consumption across the economy. She stated that the reform would reach “140 crore people” and that there would be no individual “untouched by GST.”
“The poorest of the poor also have something small that they buy, touched by GST,” Sitharaman told PTI, emphasizing the widespread impact of the tax restructuring. The government and the GST Council are hoping that the rate rationalization will lead to increased purchasing, which will in turn help stimulate economic activity, particularly during the upcoming festive season.