Huge impact on Govt's effort to improve ease of living & doing business, says EAM Jaishankar; hails next-gen GST reforms

New Delhi, Sep 4 (IANS) After the Union government announced sweeping next-generation GST reforms to bring relief across sectors, from daily essentials and healthcare to farming, education, automobiles, and appliances, External Affairs Minister (EAM) S. Jaishankar lauded the rollout and said that this will have a significant impact on the Centre's efforts to improve ease of living and doing business in the country.

Taking to social media platform X early Thursday morning, EAM Jaishankar said: "Delivering on PM@narendramodi's Independence Day announcement, the @GST_Council decision to adopt the #NextGenGST today will have huge impact on the transformation story underway in India and the Government's effort to improve ease of living & doing business. Congratulate PM and FM@nsitharaman on this historic achievement."

The EAM also said that the GST reforms will have a huge impact on the transformation of the economy in the country.

He also congratulated Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman on announcing the GST tax rates being slashed across various sectors in the country.

In a historic step toward overhauling India's indirect tax system, the GST Council, chaired by Union Finance Minister Sitharaman, on Wednesday approved sweeping rate rationalisation reforms, cutting down the existing four-rate GST structure to just two slabs -- 5 per cent and 18 per cent.

The Council scrapped the 12 per cent and 28 per cent tax slabs, implementing a simplified two-rate system aimed at reducing the burden on consumers and boosting economic activity. The reforms will come into effect from September 22, starting with revised tax rates on key goods and services.

Soon after the announcement, Prime Minister Narendra Modi took to the social media platform X to applaud the move, stating: “During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy. Glad to state that @GST_Council, comprising the Union and the States, has collectively agreed to the proposals submitted by the Union Government on GST rate cuts & reforms, which will benefit the common man, farmers, MSMEs, middle-class, women and youth. The wide-ranging reforms will improve the lives of our citizens and ensure ease of doing business for all, especially small traders and businesses.”

GST reforms are not just for rationalising rates but structural too, Finance Minister Sitharaman said on Wednesday, adding that the decision of the GST Council has been taken with full consensus and all ministers supported rate rationalisation.

In most cases, GST rates have come down drastically, and rates have been cut for farmers and agriculture and health-related products, she said during a press briefing, after the 56th Meeting of the GST Council ended here.

"PM (Narendra) Modi desired to give the benefit of GST cuts to people at the earliest. These reforms are not only on rationalising rates, but they are structural too. We have corrected the inverted duty structure," FM Sitharaman said.

With tax rates slashed on dozens of items, the reform promises to make living more affordable, empower small businesses, and boost India’s self-reliance under Aatmanirbhar Bharat, the Finance Minister said.

FM Sitharaman said that "in common man and middle class items, there is a complete reduction".

It has been decided that the GST will be levied on retail sale price (RSP) instead of transaction value on pan masala, gutkha, cigarettes, unmanufactured tobacco, and chewing tobacco, like Zarda.

The changes in GST rates of all goods except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be implemented with effect from September 22.

The GST Council has taken various decisions and recommended various measures to facilitate trade.

FM Sitharaman said that a special rate of 40 per cent will apply only to pan masala, cigarettes, gutka, and other tobacco products. Caffeinated beverages and carbonated beverages will be covered in the 40 per cent slot.

All cars under 1200 cc and bikes under 350 cc will be charged at 18 per cent. Hair oil, soap, bars, toothpaste, bicycle, and tableware will now attract a levy of 5 per cent.

The GST on agricultural goods such as tractors, horticultural, forestry, machines for soil preparation or cultivation, harvesting or crushing machines, including straw of followers, grass, movers, and composting machines have come down from 12 to 5 per cent.

GST on essential personal care items like hair oil, shampoo, toothpaste, and dental floss has been reduced from 18 per cent to 5 per cent, directly easing the monthly expenses for millions of households.

Popular ready-to-eat items such as namkeens, bhujia, chabena, and mixtures, previously taxed at 12 per cent, will now attract only 5 per cent GST, making them more affordable for consumers across all income groups.

In a move aligned with public health goals, the Council increased GST on cigars, cigarettes, and all tobacco products to 40 per cent, up from 28 per cent.

Similarly, all goods containing added sugar, sweeteners, or flavours, including aerated beverages, will now fall under the 40 per cent slab.

The GST overhaul, described by experts as a "next-generation" reform, focuses on three key pillars as highlighted by PM Modi.

--IANS

khz/