Chennai, September 16: India has moved nearly all goods previously taxed at 12% under the Goods and Services Tax (GST) into the 5% bracket, Finance Minister Nirmala Sitharaman said on Sunday, unveiling what she called the most sweeping rationalisation of the levy since its launch in 2017.
Speaking at a trade conclave in Chennai, Sitharaman said 99% of products in the 12% category would now attract 5% tax, while some items had seen rates reduced from 18% to 5% and others from 12% to zero. The reforms were approved unanimously by the GST Council at its 56th meeting on Sept. 3, she added.
The new structure, effective from Sept. 22, reduces the tax system to two main slabs — 5% and 18% — alongside a 40% rate for luxury and “sin” goods. Previously, four rates of 5%, 12%, 18% and 28% were applied.
Sitharaman said the changes would ease the burden on households and stimulate demand, directly benefiting India’s 1.4 billion citizens. “GST impacts every individual from morning to night through essential commodities,” she said, citing reductions on groceries, packaged foods, household items, handicrafts such as Thanjavur dolls, as well as consumer durables like televisions, washing machines and small cars.
She also highlighted the growth of the GST system, with registered taxpayers rising from 6.5 million in 2017 to 15.1 million today, dismissing critics who had labelled it a “Gabbar Singh Tax.”
At the Chennai event, Sitharaman released two reports on GST reforms and their impact on India and Tamil Nadu. Other speakers, including IIT-Madras Director V. Kamakoti and traders’ association leaders, welcomed the reforms but urged the government to address tax administration issues and ensure transparency in passing rate cuts to consumers.
The minister said the reforms were not limited to rate cuts but were aimed at building trust, supporting small businesses, and propelling India toward Prime Minister Narendra Modi’s economic vision for 2047.
