The GST 2.0 reforms will strengthen consumer demand and give a fresh push to India's domestic economy, Minister of State for Finance Pankaj Chaudhary said on Monday. He added that the real impact of these measures would become visible over the next four to six months.
Speaking at an interaction with businessmen, entrepreneurs and tax experts in Indore, Chaudhary said, "Prime Minister Narendra Modi believes that when GST reforms put additional money in the hands of common people, it will definitely boost market purchasing and accelerate our economy."
GST Under Modi vs. Previous Governments
Chaudhary noted that although the GST system was implemented in 2017 under PM Modi's leadership, preparatory discussions had been ongoing for nearly a decade. Taking a dig at the previous Congress-led UPA government, he said the tax reform was delayed earlier because of a "lack of credibility" and inability to convince states to adopt a unified tax structure.
"The business community faced numerous difficulties due to a fragmented tax system during the previous government's rule. At that time, you had to pay an average of about 15% in taxes. After GST implementation in 2017, this burden dropped to 11-11.5%. With the latest reforms, the average is expected to further reduce to around 8-9%," he added.
Reforms to Put More Money in Consumers' Hands
Responding to concerns about the possible fall in state revenues due to lower GST collections, Chaudhary said, "The government's role is not just to collect revenue but also to provide relief to the common man. We don't see this as a revenue loss. The savings from GST cuts will increase the purchasing power of ordinary people, boost consumption, and drive overall economic growth."
He stressed that feedback from businesses and tax professionals would be considered by the GST Council for further fine-tuning of the reforms.
Key GST Rate Reductions from September 22
The GST rate cuts, effective from September 22, 2025, cover nearly 375 goods and services, many of them essential items. Some highlights include:
- Life-saving drugs: Now completely exempt from GST.
- Other medicines: Tax reduced to 5%.
- Farm inputs: Several agricultural products now taxed at 5% or nil.
- Educational materials: Books and related items exempted from the earlier 12% GST.
Chaudhary underlined that these reforms, introduced on the first day of Navaratri, will provide relief across sectors-healthcare, agriculture, and education-while simultaneously encouraging higher consumer spending in the wider economy.
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