GST 2.0: The GST reforms, which will come into effect on September 22nd, will boost the country’s economy by a total of ₹2 lakh crore. With more money in people’s hands, domestic consumption will also receive a boost.
GST 2.0: Today, September 22nd, is the first day of Navratri, and the GST reforms have come into effect across the country. Under the next-gen GST, the tax slabs have been reduced from four (5 percent, 12 percent, 18 percent, and 28 percent) to just two (5 percent and 18 percent). This will reduce the prices of everyday items such as air conditioners, refrigerators, baby products, milk, butter, bread, etc. Union Finance Minister Nirmala Sitharaman said on Friday that with the GST reforms coming into effect on September 22nd, people will have more money in their hands, which will boost domestic consumption. This will lead to a total boost of ₹2 lakh crore in the country’s economy.
Why the GST Changes
The Finance Minister said that by reducing the GST from the previous four slabs to two, Prime Minister Narendra Modi wants to ensure that the common man and small and large businesses in the country benefit from increased profits. The Finance Minister stated that due to GST reforms, 99 percent of products that were subject to a 12 percent GST are now in the 5 percent slab. Similarly, 90 percent of items that were subject to a 28 percent GST are now in the 18 percent slab. Many major FMCG companies have also voluntarily reduced prices to ensure that the benefits of this change reach consumers directly.
How will 2 lakh crore rupees be saved?
Speaking at the 80th anniversary of the Tamil Nadu Foodgrains Merchants Association, Sitharaman said, “GST 2.0 will boost consumption because the two-slab tax structure will reduce the prices of many commodities, which will boost domestic consumption. This means that the government will receive 2 lakh crore rupees instead of collecting taxes from the public, but this money will go directly into the economy.”
She said, “For example, when you buy the same thing repeatedly, for example, soap, in large quantities, this will cause manufacturers to increase production. Increased production will lead to hiring more people. When a large number of people pay taxes on their income to the government, the government’s revenue will also increase in the form of indirect taxes. If this cycle continues, it will be good for the economy.”
Overall, when the country’s public spends more money, demand will increase. To meet this demand, production will increase, which will create more jobs. When there are more jobs, the tax base will also increase.
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