The Goods and Services Tax (GST) reforms that came into effect on Monday will boost savings and directly benefit every section of society, Prime Minister Narendra Modi said in a letter to citizens, pointing out that the new taxation slabs will encourage greater growth and investments and help in meeting the goal of developed India by 2047.
The reforms represent the most significant overhaul of India’s consumption tax since GST’s 2017 launch, streamlining the structure from four slabs to essentially two rates of 5% and 18%. The government has said 99% of the goods that earlier attracted 12% GST have now been shifted to 5%.
“Our collective goal is Viksit Bharat by 2047. To achieve it, walking on the path of self-reliance is imperative. These reforms strengthen our local manufacturing base, paving the way towards Aatmanirbhar Bharat,” he said in the letter.
“This year, the festive season brings an added reason to rejoice. These reforms will boost savings and directly benefit every section of society, be it farmers, women, youth, poor, middle class, traders or MSMEs. They will encourage greater growth and investments and accelerate the progress of every state and region,” the PM added.
Modi also travelled to Arunachal Pradesh and Tripura on Monday. In the former, he interacted with local entrepreneurs and members of self-help groups, and urged them to buy and sell only “swadeshi” products.
Modi said that despite facing major challenges over the years, his government consistently reduced income tax rates. “GST has now been simplified to just two slabs. Many items have become tax-free. Building a home, purchasing a scooter or bike, dining out, and travelling have all become more affordable. GST Savings Festival is a milestone,” he said.
In his address to the nation on Sunday, the PM had said Indians will save ₹2.5 lakh crore on account of the GST reform and the income tax changes announced earlier this year.
Terming the reforms as “Bachat Utsav” (savings festival), he said during the ongoing festive season which began with the Navaratri festival, people should resolve to support products Made in India. “…This means buying Swadeshi products that have the sweat and toil of an Indian involved in their making, irrespective of the brand or the company that makes them,” he said.
In his letter, Modi said the reforms will boost savings and directly benefit every section of society in addition to giving trade and production a fillip. “They will encourage greater growth and investments and accelerate the progress of every state and region.”
He highlighted how the prices of daily essentials such as food, medicines, soap, toothpaste and insurance will now either be tax-free or fall in the lowest 5% tax slab.
As the new GST rates were rolled out on Monday, senior Union ministers including finance minister Nirmala Sitharaman and health minister and Bharatiya Janata Party chief JP Nadda met traders and shopkeepers to speak about the GST reforms. Modi said in his letter that it was heartening to see various shopkeepers and traders putting up “then and now” boards which indicate taxes pre-reforms and post-reforms.
“In the last few years, 25 crore people have risen above poverty and formed an aspirational neo-middle class. Further, we have also strengthened the hands of our middle class with the massive income tax cuts, which ensure zero tax up to the annual income of ₹12 lakh…If we combine the income tax cuts and the next generation GST reforms, they add up to savings of nearly ₹2.5 lakh crore for the people,” the PM said.
The PM said the small industries, shopkeepers, traders, entrepreneurs and micro small and medium enterprises will also see greater ease of doing business and ease of compliance.
“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,” the PM said.
Noting that the nation’s GST journey, which began in 2017, was a turning point in freeing citizens and businesses from the web of multiple taxes, Modi said the GST united the nation economically.
“‘One Nation, One Tax’ brought uniformity and relief. The GST council, with the active participation of both Centre and states, took many pro-people decisions. Now, these new reforms take us further, simplifying the system, reducing rates and putting more savings in the hands of the people,” he said.
“Lower taxes, lower prices and simpler rules will mean better sales, less compliance burden and growth of opportunities, especially in the MSME sector,” he said.
He also promoted indigenously developed products.
“On a related note, this festive season, let us also resolve to support products that are Made in India. This means buying Swadeshi products that have the sweat and toil of an Indian involved in their making, irrespective of the brand or the company that makes them,” he said.
“Every time you buy a product made by our own artisans, workers and industries, you are helping many families earn their living and creating job opportunities for our youth,” Modi said.
He appealed to shopkeepers and traders to sell products that are made in India. “Let us proudly say – what we buy is Swadeshi. Let us proudly say – what we sell is Swadeshi,” the Prime Minister said.
“I also urge state governments to encourage industry, manufacturing and the improvement of the investment climate….I wish you and your families a joyous Navaratri and a season full of happiness and savings through the ‘GST Savings Festival’,” Modi said.
Modi also interacted with traders and merchants of Arunachal Pradesh during his visit. Local traders said that under the new tax reforms, construction costs will fall, making housing more affordable, while cheaper raw materials will help produce cost-efficient local products.
On X, Modi noted that during the interaction, traders expressed happiness over the reforms.
“As the sun rose today, so did a new chapter in India’s economic journey, with the start of GST Bachat Utsav. And, what better place to be than Arunachal Pradesh, India’s beautiful Land of the Rising Sun. In Itanagar, I met local traders and retailers who showcased a vibrant range of products, including aromatic teas, flavourful pickles, turmeric, bakery goods, handicrafts and more,” he posted.