Mumbai: In the latest meeting of the GST Council, big decisions were made that could help grow India's economy. The new system, called GST 2.0, is focused on reducing prices of essential items to increase people's spending.
The goal is not only to help consumers but also to make doing business easier.
New Tax Structure
The council has introduced a simpler structure:
- Two main tax slabs: 5 percent and 18 percent
- A higher tax rate of 40 percent for luxury and harmful products like tobacco, pan masala, and expensive items
- This system aims to boost the economy, help the middle class, and support small businesses (MSMEs).
How Will GDP Grow?
More Spending: Lower tax on everyday goods, packaged food, and home appliances means prices will go down. This will encourage people to spend more, which increases demand.
Simpler Tax System: Moving from four GST slabs to just two makes the process easier for businesses and improves the ease of doing business in India.
Stronger Local Market: More consumption means a stronger domestic market. This helps India face global economic challenges better.
Expected Growth: Experts like Morgan Stanley believe that GDP could increase by 0.5 percent to 0.6 percent due to these reforms.
Which Sectors Will Benefit?
Real Estate: Lower GST on cement will reduce construction costs.
Healthcare: Lower GST on many medicines will benefit patients and the health sector.
When Will the New Rates Start?
The new GST rates will be effective from September 22, 2025.
