New Delhi: The income tax relief provided for in the 2025-26 Budget, coupled with GST rate rationalisation, is set to further push India’s economy to another level, Union minister and BJP leader Ashwini Vaishnaw told reporters Saturday, addressing a presser from the party headquarters.
“Before 2014, the taxation system was very complex and goods were taxed at multiple levels. GST has made it simple. This rationalisation and simplification in GST reforms will make people’s lives easier,” he said at the presser.
All daily-use goods saw GST reduced under the next-generation reforms, he said.
“The promise PM Modi had made from the ramparts of the Red Fort have been fulfilled,” he said.
On September 22, the first day of Navratri, all changes in GST rates will come into effect.
“This GST reform will push further India’s economy. From pure economics point of view, our GDP is currently at Rs 3.30 lakh crore, of which Rs 2.02 lakh crore is our consumption. Even if our consumption rises by 10%, we will have Rs 20 lakh crore extra consumption, contributing to GDP,” he gave a back of the envelope calculation as to what to extent can this GST reform boost the country’s consumption.
“Consumption has a positive multiplier effect and it creates a virtuous cycle in the economy,” he continued.
Sweeping changes have been made what the government termed the next-generation GST (Goods and Services Tax) rationalization. It came just days after Prime Minister Narendra Modi announced it from the ramparts of the Red Fort on Independence Day. This is aimed at reducing the tax burden on citizens while stimulating economic growth.
The GST Council, approved significant rate cuts across multiple sectors, which the government has described as a Diwali gift for the nation. The announcements were made by Finance Minister Nirmala Sitharaman.
On the essential items front, items of daily household use will now cost less. Products such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving cream, which earlier attracted 18 per cent GST, will now fall under the 5 per cent bracket.
