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Informist, Sunday, Sept. 21, 2025

NEW DELHI - The dual tax bonanzas in the form of income tax cut announced in the Budget for 2025-26 (Apr-Mar) and the recent sweeping goods and services tax reforms will lead to savings of over INR 2.5 trillion annually, Prime Minister Narendra Modi said Sunday, calling the upcoming festival season a "Bachat Utsav".

Addressing the nation on the eve of Navratri, Modi said the "Bachat Utsav" will enhance savings and make it easier for people to purchase their preferred items. His address to the nation comes hours before the new GST rates take effect from Monday.

On Sept. 3, the GST Council overhauled the indirect tax regime by collapsing the four-slab GST structure of 5%, 12%, 18%, and 28% to a two-slab structure of 5% and 18%. The council also introduced a new GST rate of 40% on sin and luxury goods. In a press conference after the GST Council meeting, Finance Minister Nirmala Sitharaman said all the new rates, except for those on tobacco products, will take effect from Monday.

One of the key takeaways from Sitharaman's eighth Budget speech was the hike in the tax rebate limit to INR 1.2 million, effectively meaning that individuals with income of up to INR 1.2 million per annum would be exempted from paying any income tax. The move was aimed at increasing disposable income in the hands of taxpayers to spur demand. The changes in income tax will result in a revenue loss of INR 1 trillion per annum, Sitharaman had said at the time of announcing the tax bonanza.

The benefits of this savings festival will reach the poor, middle class, neo middle class, youth, farmers, women, shopkeepers, traders, and entrepreneurs alike, Modi said. He also said that these reforms will accelerate India's growth story, simplify business operations, make investments more attractive, and ensure that every state becomes an equal partner in the race for development.

Considering that the benefits of GST rate cuts hinge on businesses passing on the tax cut, Modi lauded the positive response from shopkeepers towards the GST reforms. He noted that they are actively working to pass on the benefits of GST reductions to customers. He said in many places, boards displaying price comparisons--before and after the reforms--are being displayed prominently.

The GST Council segmented the two broad GST slabs on the tenets of 'merit' and 'standard', putting majority of common-use items in the 5% slab, thereby bringing down the effective average GST rate. A host of white goods, especially consumer durables like washing machines and big televisions were moved to the 18% slab from 28%, thereby lowering the average GST rate.

The prime minister said that reform is a continuous process, and as times change and national needs evolve, next-generation reforms become equally essential. Keeping in view the current requirements and future aspirations of the country, these new GST reforms are being implemented, he said. End

Reported by Priyasmita Dutta

Edited by Ashish Shirke

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