New Delhi, September 22: — India’s revised GST regime took effect on Monday, lowering tax rates on 375 items ranging from groceries, medicines, and clothing to cars, electronics, and tractors, in a move aimed at boosting consumption amid global trade uncertainties.
Under the “Next-Gen GST” reforms, tax slabs of 5%, 12%, 18%, and 28% have been rationalized into two rates — 5% and 18%. Officials said nearly 99% of daily-use items are now cheaper, with household bills for essentials expected to fall by about 13%.
Union Finance Minister Nirmala Sitharaman visited Laxmi Nagar market in the national capital, interacting with shopkeepers who welcomed the price cuts. “The shopkeeper shared that next-generation GST rate cuts on many stationery items have reduced prices, benefiting students and parents,” her office said in a post on X.
Prime Minister Narendra Modi termed the reform a “GST Bachat Utsav,” noting that, combined with the increased income tax exemption to Rs 12 lakh, households stand to save Rs 2.5 lakh crore annually. “Your household expenses will reduce and it will be easier to fulfil aspirations such as building a home, purchasing a vehicle, purchasing appliances, eating out or planning a family vacation,” he said in an open letter.
The government highlighted specific savings: a small car buyer could save around Rs 70,000; tractors up to 1,800 cc would cost Rs 40,000 less; bikes and scooters up to 350 cc would be cheaper by Rs 8,000; TVs above 32 inches would save Rs 3,500; and air conditioners would cost Rs 2,800 less as GST falls from 28% to 18%. Stationery, clothing, footwear, and medicines would see 7-12% savings, while individual health and life insurance policies remain exempt.
Union Home Minister Amit Shah said the reforms demonstrate Modi’s “steely resolve” to support the poor, youth, farmers, and women.
However, several opposition-ruled states criticized the Centre for claiming credit, arguing they will bear the brunt of revenue loss. West Bengal Chief Minister Mamata Banerjee said, “It was I who had asked for withdrawing the additional GST burden on people, and the Centre should not take undue credit for it. Every state will have to find ways to tide over the revenue loss.”
Karnataka Chief Minister Siddaramaiah accused the government of “deceiving” citizens, noting that the GST was implemented and raised under Modi’s tenure and the Centre is now taking credit for reductions. Telangana Chief Minister A. Revanth Reddy demanded five years of compensation for state revenue losses. Congress general secretary Jairam Ramesh called the reform “limited” and eight years overdue, questioning whether the benefits would reach consumers.
Economists and officials expect the rate cuts to stimulate demand during the festive season, cushioning India’s economy against external headwinds, including a 50% US tariff on Indian exports.
