Finance Minister Nirmala Sitharaman on Saturday said the recent Goods and Services Tax (GST) overhaul is not limited to rate reductions but is designed to make life easier for both businesses and consumers.
In an interview to PTI, she explained that the reforms include simplified compliance norms, faster refunds and quicker registrations. Under the new framework, 90 per cent of refunds will be processed within a stipulated time, and companies will be able to register within three days.
Simplifying product classification
The GST changes, effective from September 22, will also resolve confusion over product classification by placing similar goods in the same tax bracket.
For instance, salted popcorn, whether loose or pre-packed, will now be taxed at 5 per cent. Earlier, pre-packed salted popcorn attracted 12 per cent tax and caramel popcorn 18 per cent. Cream buns too will now fall under the 5 per cent slab, down from 18 per cent.
Nearly 400 products — from soaps and shampoos to cars, tractors and air conditioners — will become cheaper. Premiums paid on individual health and life insurance will also be exempt from GST.
The new structure will have two main slabs: 5 per cent for essential items and 18 per cent for most others, with a higher 40 per cent rate reserved for luxury and sin goods. Daily-use foods such as bread, milk and paneer will remain tax-free.
A “people’s reform”
Calling the revamp a “people’s reform”, Sitharaman said: “This is a reform which touches the lives of all 140 crore people. There is no individual in this country who is untouched by GST. The poorest of the poor also have something small that they buy, touched by GST.”
She added that the reduction will lower monthly household bills and make aspirational purchases like cars and appliances more affordable. “People do understand, for example, Rs 100 with which they go to the shop to buy a thing. Today, with the same Rs 100, they can buy one and a half of the commodity. Earlier, they bought one,” she said.
Reforms to boost economy and consumption
Sitharaman stressed that the move will boost consumption and create a “virtuous cycle” for the economy. “There is not going to be one family which is going to be without this positive impact of the GST touching them… 140 crore people are going to benefit in one way or the other. So this will boost consumption, and as a result, I think the virtuous cycle will start,” she said.
Monitoring industry response
The finance minister also said she would personally monitor whether the benefits are passed on to consumers. “They’ve all come out openly to say we will pass this on. So, I can see the positivity from industry and trade… I’m very confident they will pass it on,” she said.
“I have said from September 22 my main focus in my job would be to watch out and see if it is getting passed on and where it is not getting passed on, I will engage with industry and say that they have to.”
Inflation under control
On inflation, she said it was already under control and that the GST cuts would encourage people to spend more. “There is no doubt about it,” she added.
