The Government of india on December 09, 2025, informed in Rajya Sabha that the recent GST reforms have begun to show a strong and positive economic impact, both in terms of consumer welfare and revenue stability. Responding to Unstarred Question No. 1047, Minister of State in the Ministry of Finance Shri Pankaj Chaudhary stated that the reforms adopted by the 56th GST Council on 03rd September 2025 represent one of the most comprehensive rationalisations of the GST framework since its inception.
The Minister underlined that consolidating the earlier four-tier rate system into a simpler two-rate GST structure with 18% standard rate and 5% merit rate, along with a 40% de-merit rate for limited categories, has enhanced transparency and simplified compliance for taxpayers. The reform has been strategically aligned to support the common man and sectors driving economic growth.
Highlighting the socio-economic benefits, the Minister emphasized that the reduction and exemption of GST on essential items—including individual life and health insurance policies, common household products, agricultural machinery and lifesaving medicines—has directly lowered consumer expenditure. The government also confirmed that CBIC is monitoring prices of essential commodities and that data received reflects effective transmission of GST rate benefits to end consumers, thereby strengthening purchasing power.
On the fiscal front, the reforms have had a positive impact on revenue trends. GST collections have recorded consistent year-on-year rise over the last five financial years, with CGST, SGST and IGST all registering substantial growth.
Further, after the implementation of the new GST rates from 22 September 2025, collections for September, October and November 2025 remained robust compared to the corresponding months of 2024-25, underscoring buoyant economic activity and improved compliance.
The Minister reiterated that GST reforms continue to be guided by the principles of simplification, equity and public welfare, and will remain a key driver of India’s economic momentum in the years ahead.
The reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/IMPACT-OF-GST-REFORMS-ON-THE-ECONOMY.pdf
