Will GST Reform Really Boost GDP by Rs 20 Lakh Crore?
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Synopsis
Discover how the recent GST reform in India, as discussed by Minister Ashwini Vaishnaw, aims to simplify the tax structure, benefit consumers, and potentially add Rs 20 lakh crore to the GDP. This transformative change has significant implications for businesses and everyday citizens alike.
Key Takeaways
- GST reform simplifies tax structure.
- Potential GDP boost of Rs 20 lakh crore.
- Tax rates on essential goods significantly reduced.
- New GST slabs: only 5% and 18%.
- Encouragement for local businesses.
New Delhi, Sep 18 (NationPress) Union Electronics and IT Minister Ashwini Vaishnaw announced on Monday that the streamlining of the Goods and Services Tax (GST) system will facilitate business operations in India and significantly enhance overall demand, potentially adding nearly Rs 20 lakh crore to the nation’s GDP.
During a press briefing, Vaishnaw emphasized that this reform is being embraced across the country as it allows citizens to retain a larger share of their earnings while making essential goods more affordable.
In a direct response to opposition criticisms, he remarked that while the previous UPA government merely discussed issues without taking action, the NDA administration has delivered real benefits through the implementation of GST.
He cited several instances of reduced tax rates: for instance, the tax on cement has dropped from 30 percent to 18 percent; sanitary pads have been made tax-free from a previous 13 percent; footwear has seen its tax rate fall from 18 percent to 5 percent; while refrigerators are now taxed at 18 percent, and detergents have been exempted from taxes altogether.
Overall, taxes on about 370 items, which include essential goods and life-saving medicines, have been lowered. Many items that were previously subject to 5, 12, or 18 percent GST are now completely tax-exempt.
Union Finance Minister Nirmala Sitharaman has indicated that this reform could introduce an additional Rs 2 lakh crore into the economy by increasing consumers’ disposable income.
Under the revised framework, GST slabs have been reduced from four categories—5, 12, 18, and 28 percent—to just two: 5 percent and 18 percent, with a special 40 percent rate imposed on luxury and sin goods.
Union Minister Ramdas Athawale praised the reforms, stating they will elevate India's economy to new heights.
He told IANS, “I believe that Prime Minister Narendra Modi has made several commendable decisions in his 11 years, but this decision to reduce GST will elevate the country's economy significantly. It will greatly benefit the common man.”
He also highlighted the Prime Minister’s call to support local businesses.
Point of View
The GST reform spearheaded by Minister Ashwini Vaishnaw represents a critical step towards simplifying taxation in India. It not only aims to bolster the economy but also addresses the concerns of everyday citizens by making essential goods more affordable. The emphasis on reducing tax rates reflects a commitment to enhancing disposable income and supporting local industries. As the nation embraces these changes, it remains essential to monitor their implementation and impact on the broader economy.
NationPress
22/09/2025
Frequently Asked Questions
What is the main purpose of the GST reform?
The GST reform aims to simplify the tax framework, making it easier for businesses to operate in India while boosting overall demand and adding significantly to the GDP.
How much is the GDP expected to increase due to the GST reform?
The reform is projected to add nearly Rs 20 lakh crore to the country's GDP.
What changes have been made to the GST tax slabs?
The GST slabs have been reduced from four categories—5, 12, 18, and 28 percent—to two categories: 5 percent and 18 percent.
What are some examples of reduced tax rates?
Examples include cement tax dropping from 30 percent to 18 percent, sanitary pads becoming tax-free, and footwear tax decreasing from 18 percent to 5 percent.
Who has praised the GST reform?
Union Minister Ramdas Athawale has lauded the reforms, stating they will elevate India's economy.
