Prime Minister Narendra Modi on Sunday said Indians stand to save ₹2.5 lakh crore through the revised Goods and Services Tax rates that came into effect on 22 September, coinciding with the start of Navratri.
He described the reform as a “savings festival” that combines tax relief for households with measures to boost business confidence.
The overhaul, dubbed GST 2.0, simplifies India’s indirect tax regime by moving from four slabs to two primary rates of 5 per cent and 18 per cent. Ultra-luxury items remain subject to a 40 per cent levy, while tobacco and related products continue to attract a 28 per cent rate with an additional cess.
Everyday items including ghee, paneer, butter, snacks, ketchup, jam, dry fruits, coffee and ice cream are now cheaper, along with aspirational goods such as televisions, air conditioners and washing machines.
The Prime Minister said the reductions will bring relief to both the poor and the expanding middle class, complementing the income tax reforms announced earlier this year.
“From kitchen essentials and medicines to appliances and automobiles, citizens will see greater savings with every purchase,” Modi said, urging the public to favour swadeshi products to support domestic growth.
The reforms are expected to spur consumption in key sectors. Lower automobile prices are likely to encourage first-time buyers and upgrades, providing a boost to manufacturing, components and financing.
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Reduced prices on household goods and appliances, timed with the festive season, are set to drive sales across FMCG networks, retail chains and e-commerce platforms.
The Prime Minister also underlined the benefits for small and medium enterprises, arguing that lower taxes would enhance competitiveness and strengthen an economy heavily reliant on SMEs.
He said the simplified tax structure would ease business operations, attract investors and support India’s growth story.
The Opposition, however, criticised the move as “a band-aid on deep wounds” and demanded an apology for taxing essential goods in the first place.
Officials and policymakers are hoping that stronger domestic demand will help cushion India against the impact of new US tariffs on merchandise exports.
The GST reforms mark the most significant revamp of India’s consumption tax system since its introduction in 2017, replacing the earlier four-tier structure with a streamlined approach aimed at increasing efficiency, lowering costs and giving households what Modi called a “double bonanza” of income tax relief and reduced GST.
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