GST rate cuts impact: FM Sitharaman says reforms to inject Rs 2 lakh crore into economy; ‘people will have cash in hand’

GST rate cuts impact: Finance Minister Nirmala Sitharaman on Wednesday said that GST rate cuts announced by the Modi government, effective September 22, will inject Rs 2 lakh crore into the economy.

"With this new gen tax regime, with only two slabs (5 per cent and 18 per cent), Rs 2 lakh crore is injected into the economy. People will have cash in hand," she said according to a PTI report.

During the Outreach and Interaction Program on Next Gen GST Reforms, she highlighted that post-tax reforms, 99 per cent of items previously under 12 per cent GST have shifted to five per cent. Additionally, 90 per cent of items formerly taxed at 28 per cent have moved to the 18 per cent category.



She noted that many companies, including prominent FMCG organisations, are willingly reducing rates and transferring benefits to consumers ahead of September 22, when the new GST regime takes effect.

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According to Sitharaman, the NDA government considered five essential criteria before implementing rate changes: providing relief to poor and middle-class citizens, addressing middle-class aspirations, supporting farmers, favouring MSMEs, and focusing on sectors crucial for employment generation and export potential.

The GST revenue saw substantial growth, reaching Rs 22.08 lakh crore in 2025, compared to Rs 7.19 lakh crore in 2018 (FY 2017-18), the minister said.

She noted a significant increase in taxpayer registration, with numbers rising to 1.51 crore from the previous 65 lakh.

Sitharaman emphasised that the GST Council stands as the sole constitutional body established post-independence, exemplifying cooperative federalism.

She criticised the previous UPA administration's tax framework, labelling it problematic, whilst explaining the extensive work undertaken to implement GST as a unified national tax system.

"The UPA government went for 10 years. You could not come with GST. You could not convince the states about GST… I could have given a harsh political reply. But not today," she stated.

The simplified GST structure, featuring reduced rate slabs from four (5, 12, 18 and 28) to two (5 and 18 per cent), will be implemented from September 22.


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