PM Modi Announces GST 2.0 Reforms On Navratri: A Major Boost For India’s Growth

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Prime Minister Narendra Modi addressed the nation on Sunday, ahead of the launch of new GST reforms, calling it a step towards the next generation of tax improvements. The announcement came on the eve of Navratri, and PM Modi wished all citizens a happy festival while introducing the “GST Savings Festival”.

Key Highlights of GST 2.0

Boost to Development: The new GST reforms aim to accelerate India’s economic growth.
Ease of Business: Simplified taxation will make business easier and attract investment.
Benefit for All: Women, traders, middle class, and lower-income groups will gain from these changes.
States as Partners: State governments will play an active role in this development journey.

Background: Why GST Was Needed

Before GST was introduced in 2017, citizens and businesses dealt with a complex web of multiple taxes. Crossing check posts, filling numerous forms, and navigating varying tax rules was cumbersome. GST replaced this with a unified tax system, making India a One Nation, One Tax country. PM Modi highlighted that the new GST 2.0 further simplifies the system, providing more relief to taxpayers.

Major Changes in GST 2.0

The revised GST 2.0 focuses on affordability and simplicity:

5% GST: Most daily essentials, medicines, food items, clothing, and services will now attract only 5% tax.
18% GST: Products previously taxed at 28% or more, such as electronics, small vehicles, and auto parts, will now have 18% tax, reducing costs on TVs, fridges, laptops, bikes, and footwear.
40% GST: Luxury and demerit goods like luxury cars, yachts, planes, weapons, tobacco, alcohol, soft drinks, and gambling services will continue to attract higher tax.
0% GST: Essential items for social welfare, including UHT milk, school supplies, and insurance/welfare services, remain tax-free.

Who Will Benefit?

GST 2.0 provides dual benefits:

Middle Class Relief: Individuals earning up to Rs 12 lakh annually are exempt from income tax this year.
MSMEs: Small and medium enterprises will benefit from simpler rules and lower taxes, boosting India’s self-reliance and job creation.
Consumers: Lower GST on everyday items will reduce household expenses.
Traders & Hoteliers: Businesses, especially hotels and retailers, will enjoy tax relief, improving profitability.

Encouraging Make in India

PM Modi urged citizens to support domestic products and reduce dependence on imported goods. He emphasized that high-quality Indian products should meet national and global standards. States are encouraged to promote investment and strengthen the Make in India initiative.

How Consumers Can Ensure Correct GST

If a retailer does not apply the correct GST rate, consumers should:

Check the bill for correct tax rates.
Request the retailer to apply the right GST rate.
If unresolved, keep the bill safe and file a complaint with the GST Helpline or consumer forum.

Modi Highlights Benefits of Tax Cuts and Encourages Local Spending

Prime Minister Modi said that large parts of India’s 1.4 billion population will benefit from the “double bonanza” of income tax cuts announced in February and reduced GST rates. He added that these measures will save people ₹2.5 trillion, giving them more money to spend ahead of the festive season.

India’s festive period, which peaks with Diwali next month, typically drives about a third of some companies’ annual sales. Modi encouraged citizens to support locally-made products, saying, “What the nation needs and what can be made in India should be made within India itself.”

This push for higher domestic consumption aligns with Modi’s broader goal of increasing India’s self-reliance amid growing global protectionism, which he had criticized earlier as economic selfishness.

Conclusion

GST 2.0 represents a milestone in India’s taxation history. By simplifying taxes, reducing rates on essential items, and promoting Make in India, these reforms aim to increase household savings, support MSMEs, and accelerate India’s economic growth. This festival season, citizens and businesses alike have reasons to celebrate, making the GST Savings Festival a reality across the nation.