New Delhi – Union Finance Minister Nirmala Sitharaman on Saturday announced that the government’s upcoming GST reform will leave nearly ₹2 lakh crore in the hands of consumers, boosting domestic demand and supporting small businesses. The new framework, which will cut the number of GST slabs from four to two, will take effect on Monday.
Speaking at the 80th anniversary of the Tamil Nadu Food and Grains Association, Sitharaman said the move is designed to ease the tax burden on households and stimulate economic growth. “Prime Minister Narendra Modi is keen to ensure that the poor, the backward, the middle-class families, and small and medium entrepreneurs benefit in a big way,” she noted.
The Finance Minister explained that reducing GST to two slabs will directly lower the prices of commonly purchased products, offering relief to consumers at a time when inflationary pressures remain a concern. Economists believe this reform could encourage higher spending on goods and services, creating a ripple effect across industries and strengthening domestic consumption.
The announcement marks one of the most significant overhauls of the Goods and Services Tax system since its rollout in 2017. Businesses and trade associations have long demanded simplification, arguing that multiple slabs made compliance complex and often led to disputes over classification.
Industry experts suggest the reform will particularly help small and medium enterprises (SMEs), which form the backbone of India’s economy, by reducing paperwork and improving cash flow. The Finance Minister said the government is confident the change will create a fairer tax structure, benefiting both businesses and consumers.
