GST 2.0 reforms will incentivise consumers to push domestic demands: Sitharaman

Union Finance Minister Nirmala Sitharaman on Friday said that the new GST reforms will enable people of India to spend their money as prices of goods and services have come down.

Talking about GST 2.0’s impact on consumption in the economy, Sitharaman told Network18, “Every item which comes under GST had to be looked at and regrouped. Viksit Bharat has to be built while meeting the growing aspirations of families. Citizen now has a choice to spend money. Prices of everything have come down.”

#Exclusive | Every item which comes under GST had to be looked at and regrouped. Viksit Bharat has to be built while meeting growing aspirations of families. Citizen now has a choice to spend money. Prices of everything has come down: FM @nsitharaman#GSTReforms | @18RahulJoshi pic.twitter.com/SKQ1O3OXGG

— News18 (@CNNnews18) September 5, 2025

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The Goods and Services Tax (GST) Council has announced next-generation tax reforms as promised by Prime Minister Narendra Modi from the ramparts of Red Fort on Independence Day. The Council has approved the centre’s proposal to streamline the indirect tax structure into a dual slab of 5 per cent and 18 per cent.

When asked how the idea behind GST rationalisation came about, the FM said, " Eight months ago, PM called me and asked how the GST should be revamped. This tax is something which touches life of every citizen so we need to be sensitive. For first time centre came up with a proposal."

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#Exclusive | Eight months ago, PM called me and asked how the GST should be revamped. This tax is something which touches life of every citizen so we need to be sensitive. For first time centre came up with a proposal: Finance Minister @nsitharaman#GSTReforms | @18RahulJoshi pic.twitter.com/IGiHUYE9z1

— News18 (@CNNnews18) September 5, 2025

The current four-tier tax structure, comprising 5 per cent, 12 per cent, 18 per cent, and 28 per cent, will be replaced by a simplified two-rate system. Under the new model, essential or “merit” goods will be taxed at a reduced rate of 5 per cent, while the majority of goods and services will be subject to a standard 18 per cent rate.

A day after the central government announced a GST bonanza ahead of the festive season, offering sweeping tax cuts on nearly 400 goods and services, companies have begun the process of adjusting their prices for consumers to implement them by September 22.