Will Tax Cuts Increase People’s Spending and Boost the Economy?
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Synopsis
In a significant move, the NSE CEO endorses the government's new GST structure, predicting that reduced tax rates will empower consumers to spend more, creating a positive economic impact. This shift is expected to enhance compliance and stimulate growth beyond 8% GDP.
Key Takeaways
- GST Slabs Reduced: The GST structure has been simplified to two rates: 5% and 18%.
- Impact on Disposable Income: Lower tax rates will increase consumers' disposable income.
- Encouraging Compliance: Fair tax rates are expected to boost compliance and reduce evasion.
- Growth Projections: The changes could facilitate over 8% GDP growth in the coming years.
- Effective Date: The new GST rates will be implemented from September 22.
New Delhi, Sep 4 (NationPress) Ashishkumar Chauhan, Managing Director and CEO of NSE, expressed his support for the government's initiative to streamline the Goods and Services Tax (GST) framework on Thursday. He noted that the implementation of lower tax rates would result in more disposable income for citizens, promoting increased spending and fostering a positive economic cycle.
Chauhan extended his congratulations to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for their "landmark" choice to reduce the number of GST slabs from four to two.
He remarked, "Fair tax rates will encourage better compliance and diminish tax evasion. This reform is poised to uplift the overall economic landscape in the nation,"
According to the NSE leader, this decision not only simplifies the taxation system but also sets the stage for India to achieve a GDP growth rate of over 8 percent in the forthcoming years.
“It has always been my conviction that reasonable taxes would enhance tax compliance while significantly curbing tax avoidance and evasion. The overall reduction of rates will simplify the complexities that have been addressed,” Chauhan articulated.
He reminisced that the introduction of GST in 2017 was a pivotal moment, and this recent adjustment will further bolster India's economic narrative.
“Indeed, the implementation of GST in 2017 was a remarkable step, and this decision will greatly facilitate India's journey towards achieving a GDP growth rate of over 8 percent,” he stated.
In a recent meeting, the GST Council, under the leadership of Finance Minister Nirmala Sitharaman, decided to eliminate the 12 percent and 28 percent tax rates, retaining only the 5 percent and 18 percent slabs.
This new tax structure will take effect on September 22.
Among the changes, the tax rate on personal care products like hair oil, shampoo, toothpaste, and dental floss has been reduced from 18 percent to 5 percent.
Additionally, packaged snacks such as namkeens, bhujia, mixtures, and chabena have also transitioned to the 5 percent slab from the previous 12 percent.
Point of View
The recent changes in the GST framework represent a significant shift towards more taxpayer-friendly policies. The decision to reduce tax slabs is anticipated to enhance compliance, reduce evasion, and stimulate economic growth, making it a crucial step for India's economic landscape.
NationPress
04/09/2025
Frequently Asked Questions
What are the new GST tax slabs?
The new GST structure has simplified the rates to just two slabs: 5% and 18%, eliminating the previous 12% and 28% rates.
When will the new GST rates take effect?
The revised GST structure will come into effect starting September 22.
How will these tax cuts impact consumers?
Lower tax rates will increase disposable income for consumers, encouraging higher spending and stimulating economic growth.
What products have seen tax rate reductions?
Personal care items like hair oil, shampoo, and packaged snacks have seen their tax rates reduced to 5%.
What is the expected GDP growth with these changes?
The NSE CEO believes that these reforms could help India achieve a GDP growth rate exceeding 8% in the coming years.
