PM Hails ‘Double Dose’ GST Reforms, Jabs Congress Over Past Tax Regime
Prime Minister Narendra Modi on Thursday lauded the sweeping overhaul of the Goods and Services Tax as a “double dose of support and growth,” a day after the GST Council approved a two-slab structure that sharply cuts levies on mass-consumption goods while ringfencing “sin” and luxury items with a higher rate. Framing the revamp as relief for households and a spur to the economy, he said the simplified regime would benefit the poor, the neo middle-class, farmers, women, students, and youth alike, even as he criticised the UPA era for failing to translate talk of tax reform into action.
Finance Minister Nirmala Sitharaman on Wednesday announced that the 12% and 28% slabs will be scrapped in favour of a cleaner 5% and 18% structure, alongside a special 40% rate for demerit and luxury goods. The changes take effect September 22, the first day of Navratri. In practical terms, hundreds of items are slated to get cheaper: household staples such as hair oil, shampoos, soaps, toothpaste and toothbrushes move to 5%; a raft of food and kitchen items drop from 12% to 5%; and essential dairy products like UHT milk, paneer and chhena shift from 5% to nil.
Spectacles will attract 5%. On the higher end, nearly 90% of goods previously taxed at 28% move to 18%, including TVs, ACs, dishwashers, cement, and small cars and sub‑300cc motorcycles, while buses, trucks, ambulances and auto parts also slot into 18%. Tobacco products and cigarettes will continue to draw 28% plus compensation cess until pandemic‑era loans are repaid, after which they are intended to migrate to the new 40% slab along with other sin goods.
Addressing National Awardee teachers in Delhi, the Prime Minister said the overhaul delivers savings for households and strength for the broader economy, arguing that lower rates on everyday items will lift consumption and improve quality of life.
He presented the reforms as fivefold gains for the economy: simpler taxes, higher living standards, rising consumption and growth, a better investment and jobs climate through ease of doing business, and stronger cooperative federalism. He also took aim at the Congress‑led UPA, saying that while pre‑2014 discussions nodded to overhauling a fragmented tax regime, substantive reform arrived only with GST’s rollout in 2017 and has now been advanced with “next‑generation” rationalisation.
The Council’s decisions also tackle inverted duty structures such as moving man‑made fibre and yarn into the 5% bracket aimed at reducing working capital blockages and disputes. In health care, 33 life‑saving drugs will move from 12% to nil, amplifying the reform’s social‑sector thrust. The government framed the package as a Diwali‑season stimulus to both ease of living and ease of doing business, with automated processes and simplified fitment seen reducing compliance friction.
While the political messaging was celebratory, experts cautioned that Centre and states will need to closely track revenue impacts from the broad‑based rate cuts. With the original five‑year compensation window having lapsed, states have pressed for clearer safeguards, and policymakers may rely on higher compliance, better buoyancy, or calibrated cess collections to manage fiscal balances.
For now, the revamped GST is designed to be consumer‑friendlymaking essentials more affordable and big‑ticket indulgences meaningfully costlier while simplifying slabs to improve transparency and predictability for businesses. The coming weeks will test how quickly companies pass through lower rates to retail shelves and whether a festive tailwind can translate policy intent into measurable gains in consumption, margins, and growth.
