‘System-Cleaning Reform’: FM Sitharaman on GST 2.0

Finance Minister Nirmala Sitharaman aid the new wave of Goods and Services Tax (GST) reforms has made the system simpler, fairer, and more consumer-friendly.

Speaking at a conclave of trade and industry associations in Chennai, Sitharaman explained that the earlier GST system often left businesses confused about tax rates, leading to disputes and even court cases. “For instance, something as simple as popcorn was taxed differently depending on whether it was sold on the street or packaged in a shop. That confusion is now gone,” she said.

With the launch of GST 2.0, such anomalies have been ironed out. Now, goods of the same type are taxed at the same rate. Most food items will either be tax-free or fall under the 5% bracket.

The 56th GST Council meeting on September 3 took a major decision to scrap the 12% and 28% tax slabs, while also abolishing the compensation cess. More than 300 items, including medicines, dairy products, insurance, and daily consumer goods, have become cheaper, with rates brought down to either 5% or zero. The new rates will take effect from September 22.

“About 99% of goods that earlier attracted 12% tax are now down to 5%. From morning till night, people will feel the benefit of GST,” Sitharaman said. She added that FMCG companies like HUL, Godrej, and Dabur have promised to pass on the savings to consumers.

The minister also said that GST refunds will now be quicker, with 90% of claims processed automatically. New businesses will get GST registration in just three days. “GST 2.0 is a system-cleaning reform. It simplifies, reduces rates, and puts consumers first,” she stressed.

She highlighted five guiding principles behind the new system—making essentials cheaper, helping the poor and middle class, supporting farmers, cutting costs for small businesses, and boosting key sectors of the economy.
The conclave, organised by the Chennai Citizens’ Forum, saw participation from major trade bodies including CII, FICCI, Hindustan Chamber of Commerce, and the Insurance Brokers Association of India. Industry leaders welcomed the rate cuts while also raising operational concerns.

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