The Union Finance Minister, Nirmala Sitharaman, has announced that the long-awaited Goods and Services Tax (GST) reforms will be rolled out much earlier than expected, even before the deadline suggested by Prime Minister Narendra Modi, who had initially urged for their launch ahead of the Deepavali festival. Addressing an event in Chennai, she emphasized that these reforms are not merely a technical exercise but represent a monumental achievement for every citizen of India, as they are designed to bring tangible benefits to both consumers and businesses.
In her detailed address at the joint conclave of trade and industry associations, organized under the theme “Tax Reforms for Rising Bharat” by the Chennai Citizens Forum, Sitharaman explained how the GST reforms will impact everyday life. She stated that the influence of GST stretches across the entire spectrum of consumer activity—from the very first product people use in the morning to the last purchase of the day. By easing tax structures and simplifying processes, the reforms will create a fairer and more efficient taxation system that resonates with the needs of a growing nation.
Highlighting the government’s proactive steps, Sitharaman revealed that almost all goods previously taxed at 12 percent have now seen their rates reduced to just 5 percent, covering a wide range of commonly used items. She further explained that, from September 22, the latest set of reforms will be implemented, following the GST Council’s decision to reduce tax rates for more than 350 items. Instead of multiple confusing slabs, only two clear categories of 5 percent and 28 percent remain, with the assurance that the highest slab will no longer be applicable to any product. This, she argued, makes compliance simpler for traders and enhances transparency for consumers.
The Finance Minister also presented data to show how GST has expanded the tax base since its introduction in 2017. Before its launch, only 66 lakh traders were part of the tax net. Today, over 1.5 crore businesses are registered under GST within just eight years, marking a significant increase in compliance. Contrary to earlier criticism, including that of Rahul Gandhi who once described GST as a “Gabbar Singh Tax,” Sitharaman asserted that traders and businesses now recognize its benefits. The growing participation has resulted in a substantial rise in government revenues, with collections soaring from ₹7.19 lakh crore in 2017 to more than ₹22 lakh crore in recent times.
She elaborated further on how GST revenues are shared between the Centre and the states, ensuring that both levels of government benefit. On average, monthly collections range between ₹1.8 to ₹2 lakh crore, of which half is distributed to the states. From the Centre’s share, about 41 percent is again transferred back to state governments, strengthening their financial autonomy. This system, she stressed, ensures that citizens and state governments alike stand to gain from a robust and growing revenue framework.
To address earlier classification issues faced by traders, Sitharaman cited the example of popcorn. Under the old system, salted popcorn was taxed at 5 percent as a namkeen, while sweetened popcorn attracted an 18 percent tax. Such discrepancies created confusion, particularly when roadside popcorn sellers faced no tax while factory-produced branded popcorn fell into different categories. The new reforms, however, have eliminated such complications by placing all food products either under the 5 percent category or exempting them altogether. This, she said, is a clear step toward simplifying the tax regime for everyone involved.
Underscoring the broader vision behind these reforms, Sitharaman linked them to Prime Minister Modi’s goal of Viksit Bharat (Developed India). She expressed confidence that people will welcome the changes and revealed that major companies, including Hindustan Unilever Ltd. and Godrej, have already assured her that they will pass on the benefits of reduced taxation to consumers.
To make the reforms more accessible and transparent, the Finance Minister also released a book in both English and Tamil, highlighting how Tamil Nadu will particularly benefit from the new system. The book outlines the differences between the earlier tax structure and the present reforms, offering citizens a clear understanding of the positive impacts. Addressing the audience, Sitharaman encouraged them to read the publication to see for themselves how these changes will bring prosperity and fairness to the taxation system in the state and across the country.
