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BUSINESS & TRADE SEPTEMBER 12, 2025 | The Indian Eye 34

GST Overhaul Aims to Spark Domestic

Demand and Ease Living Costs

The Modi government’s sweeping GST reforms slash taxes on essentials, automobiles, farm machinery,
and insurance, with a clear focus on boosting household consumption and driving domestic growth

Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman chairs the 56th meeting of the GST Council, in New Delhi on Wednesday (@PIBTvpm X/ ANI Photo)

OUR BUREAU foods including butter, ghee, cheese, goods transport vehicles also benefit assured exporters of government sup-
namkeens, bhujiya, and mixtures from the lower slab. For agriculture, port but stressed that strengthening
Mumbai / New Delhi
have also seen a cut from 12 per cent tractors will now attract just 5 per domestic demand is crucial for resil-
he Indian government has to 5 per cent. Similarly, utensils, feed- cent GST, down from 12 per cent, ience. By easing costs for consumers
launched what Prime Minister ing bottles, and clinical diapers have with tires and parts also reduced to 5 and businesses alike, the government
TNarendra Modi has described become cheaper, easing household per cent. These cuts are expected to hopes to offset external trade pres-
as “next-generation GST reforms,” budgets across the board. reduce costs for farmers and improve sures with robust internal growth.
cutting tax rates across a wide spec- A landmark step in the reforms rural purchasing power. Prime Minister Modi has
trum of goods and services in an ef- is the complete removal of GST on Industry associations have wel- framed the changes as wide-ranging
fort to boost domestic consumption. individual health and life insurance, comed the measures. The Confeder- reforms benefiting “the common
The reforms, approved by the GST which until now attracted an 18 per ation of Indian Industry (CII) hailed man, farmers, MSMEs, middle-class,
Council this week, consolidate tax cent levy. This shift is expected to them as a “phenomenal milestone,” women, and youth.” Economists
slabs into a simpler dual structure of make insurance products more af- pointing to the predictability and note that while the revenue impli-
5 per cent and 18 per cent, while re- fordable and accessible to millions reduced compliance burden. The cations of such broad tax cuts need
ducing levies on essential household of Indians, particularly those in the textile sector, long struggling with to be watched, the move could spark
items, healthcare, automobiles, tex- middle- and lower-income brackets. inverted duty structures, has gained a consumption-led growth cycle. By
tiles, and agriculture inputs. GST on critical medical items such as relief through the alignment of GST consolidating the slabs and correct-
The rate rationalization marks a thermometers, medical oxygen, diag- on man-made fibers and yarn at 5 per
structural shift in India’s indirect tax nostic kits, and corrective spectacles cent. This correction is expected to ing anomalies, the reforms aim to
regime and signals the government’s has been slashed from 12 per cent ease liquidity pressures for spinners provide stability and predictability,
reducing disputes and compliance
pivot towards stimulating internal to 5 per cent. Industry leaders have and weavers, most of whom are MS-
demand at a time when global mar- called the measure socially progres- MEs. PHD Chamber of Commerce costs.
With implementation set for
kets are tightening under rising tar- sive, noting that it not only improves and Industry (PHDCCI) called the September 22, businesses have a
iffs and trade barriers. affordability but also strengthens In- rationalization a “landmark reform” short window to adjust pricing and
dia’s healthcare ecosystem. that would ease household budgets,
RELIEF FOR HOUSEHOLDS stimulate demand, and strengthen supply chains. Industry bodies have
assured cooperation and a quick
or households, the reforms INDUSTRY GAINS domestic manufacturing. pass-through of benefits to consum-
bring visible relief. Daily-use o boost consumption in the au- STRATEGIC TIMING ers. If executed smoothly, the GST
Fproducts such as shampoo, hair tomobile sector, GST on small overhaul could achieve its intended
oil, toothpaste, toilet soaps, tooth- Tpetrol, diesel, hybrid, and he reforms come at a time dual purpose: boosting domestic
brushes, and shaving cream, earlier CNG cars has been reduced from 28 when Indian exporters are fac- consumption and creating a more ef-
taxed at 18 per cent, will now fall per cent to 18 per cent. Motorcycles Ting rising tariffs abroad. Com- ficient, inclusive, and resilient econ-
into the 5 per cent bracket. Packaged under 350 cc, three-wheelers, and merce Minister Piyush Goyal recently omy at a time of global uncertainty.

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