GST 2.0 to Put Rs 2 Lakh Crore in Consumers’ Hands: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Wednesday said the recent restructuring of the Goods and Services Tax (GST) would give consumers an additional Rs 2 lakh crore in disposable income. The move is aimed at easing the tax burden and encouraging higher household spending.

Speaking at the Outreach and Interaction Programme on Next Gen GST Reforms in Visakhapatnam, Ms. Sitharaman said that 99% of goods earlier placed in the 12% slab have now been shifted to the 5% slab. “This will be very beneficial for the middle class and the poor,” she noted.

She explained that the GST Council’s decision was designed not only to reduce costs for families but also to improve liquidity in the wider economy. “The benefits provided to various industries will translate tenfold for the public through these next-gen GST reforms,” she said.

GST collections have more than tripled since the tax was introduced, rising from Rs 7.19 lakh crore in 2018 to Rs 22.08 lakh crore in 2025. The taxpayer base also expanded from 65 lakh to 1.51 crore during this period.

After announcing income tax relief in the Union Budget 2025, the government launched GST 2.0, effective September 22. The new framework simplifies the system into two slabs: 5% for commonly used goods and 18% for all others. The earlier 12% and 28% rates have been scrapped.

Under the revised structure, most food and grocery items will be taxed at 5%, while staples such as bread, milk and paneer remain exempt.

Calling GST 2.0 the most significant reform since the rollout of GST in 2017, Ms. Sitharaman said the changes were made after a detailed review of daily-use goods. “In most cases, rates have come down substantially,” she added.

With both income tax cuts and GST 2.0 in effect, the government expects essentials to become more affordable and households to have greater spending power.