In a major reform, the Goods and Services Tax (GST) Council on Wednesday, September 3, approved sweeping reforms designed to simplify the tax system and ease the financial burden on citizens and businesses. The 56th Council meeting decided to rationalise the four-tier GST rate structure into two primary slabs of 5 per cent and 18 per cent, effectively abolishing the 12 per cent and 28 per cent categories.
From Congress to TMC, how leaders reacted?
The reforms sparked political responses. The Opposition welcomed the move but called it as belated. Trinamool Congress described it as a “victory for common people wrested from a tone-deaf regime”, particularly praising the rollback of GST on insurance premiums.
“A victory for common people. A victory wrested from a tone-deaf regime that only listens when forced. From day one, Mamata Banerjee warned the Finance Minister that taxing insurance premiums was cruel, anti-people, and would deter families from securing their future, leaving them vulnerable to financial ruin in times of crisis. The Narendra Modi govt has finally buckled under pressure. This rollback proves that BJP only acts when cornered. We will continue to fight every such Jono-Birodhi decision, in Parliament, on the streets, among the people,” reads TMC post on X.
Congress leader Priyanka Chaturvedi called the changes “long overdue”, while former Finance Minister P Chidambaram dismissed the decision as “eight years too late” and politically motivated ahead of the Bihar elections.
Chidambaram argued that sluggish growth, rising debt, and electoral compulsions may have pushed the government to act.
“His post on X reads, “The GST rationalisation and the reduction in rates on a range of goods and services are WELCOME but 8 years TOO LATE. The current design of GST and the rates prevailing until today ought not to have been introduced in the first place. We have been crying hoarse for the last 8 years against the design and rates of GST, but our pleas fell on deaf years. It will be interesting to speculate on what drove the government to make the changes: Sluggish growth? Rising household debt? Falling household savings? Elections in Bihar? Mr Trump and his tariffs? All of the above?”
Government’s defence
Finance Minister Nirmala Sitharaman rejected Opposition criticism, accusing Congress of inconsistency. “Is the Congress Party demanding five per cent tax on tobacco and gutkha? They considered GST impossible to implement. We not only implemented it but are also pursuing second-generation reforms to give relief to citizens and MSMEs,” she asserted.
Home Minister Amit Shah praised the reforms as “historic”, noting they would bring “huge relief to the poor and middle class” and strengthen MSMEs, farmers, women, and youth.
External Affairs Minister S Jaishankar described the changes as part of Prime Minister Narendra Modi’s Independence Day promise to usher in “NextGen GST” for ease of living and doing business.
Chief Ministers across party lines welcomed the measures. Maharashtra CM Devendra Fadnavis hailed the abolition of the 12 per cent and 28 per cent slabs as “a truly historic reform for New India”. He emphasised that removing GST on health and life insurance was a “massive relief for every family”.
Delhi CM Rekha Gupta called the changes “a direct benefit to farmers, MSMEs, small traders, women, and youth”, while Andhra Pradesh CM N. Chandrababu Naidu described the reforms as “pro-poor and growth-oriented”.
“We welcome the GST reforms with revised slabs across daily essentials, education, healthcare, and agriculture. This pro-poor, growth-oriented decision will benefit all sections of society, from farmers to businesses. I congratulate Hon’ble Prime Minister Narendra Modi Ji and Union Finance Minister Nirmala Sitharaman Ji on this transformative step. As announced by PM Modi Ji on Independence Day, these next-generation GST reforms mark a strategic and citizen-centric advancement of our tax framework, ensuring a better quality of life for every Indian,” Naidu’s post on X reads.
What do we know about the GST reforms?
Under the revised framework, GST on daily essentials such as toothpaste, shampoo, soaps, shaving cream, dairy products, and pre-packaged snacks has been reduced from 18 per cent to 5 per cent. In a move expected to significantly lower household costs, health and life insurance premiums have been completely exempted from GST. Medical equipment, including thermometers, oxygen supplies, and diagnostic kits, will now attract only 5 per cent GST.
Meanwhile, the reforms are also expected to boost business sentiment, particularly among MSMEs and small traders who have long demanded simpler compliance and reduced rates.
By merging slabs and cutting rates, the Council has aimed to strike a balance between revenue considerations and economic stimulus. With the reforms taking effect from 22 September, the coming months will reveal whether the changes meet their ambitious promise of transforming India’s indirect tax landscape.
Benefits for key sectors
The reforms extend relief to multiple sectors. Farmers will see costs decline, with tractor parts, irrigation equipment, and agricultural machinery now under the 5 per cent slab. In the automobile sector, hybrid vehicles, motorcycles below 350 cc, and three-wheelers will attract 18 per cent GST instead of 28 per cent. The education sector too has benefitted, with notebooks, pencils, crayons, and other essential supplies exempted from tax.
Electronics such as televisions, monitors, air conditioners, and dishwashers will move from the 28 per cent slab to 18 per cent, a shift expected to encourage consumption.
The reforms also include process changes, such as automatic registration within three working days and quicker refunds through system-based risk evaluation. The government estimates a net revenue implication of Rs 48,000 crore from this rationalisation.