Union Finance Minister Nirmala Sitharaman announced that starting September 22, a series of GST Reforms will put ₹2 lakh crore in the hands of people, which will boost domestic consumption.
She explained that the Goods and Services Tax is being simplified from four slabs to two. Ms. Sitharaman noted that PM Modi aims to ensure that the middle-class families, and the micro, small, and medium enterprises (MSMEs) benefit from these changes.
New GST Reforms effective from 22 September
She spoke at the 80th anniversary of the Tamil Nadu Foodgrains Merchants Association in Madurai on Friday, September 19, 2025. The new GST reforms, along with a revised tax structure, will take effect on September 22.
“With the proposed GST reforms, we expect an increase in domestic market consumption. The Finance Ministry does not collect the ₹2 lakh crore as taxes from the public; instead, it circulates back into the economy, supporting domestic consumption,” she said.
Two slab structure reduce the products price
She further explained that the two-slab structure reduce the price of products that customers usually buy, as per GST Reforms. “For example, if you purchase a larger quantity of a product, such as soap, the manufacturer will ramp up production. To do this, they will hire more workers. With more workers, income taxes will be paid, providing revenue to the government through indirect taxes. This beneficial cycle is good for the economy,” she said.
Ms. Sitharaman said that when people spend more, demand increases. Higher production to meet this demand leads to more jobs. With more jobs, there will be a larger tax base.
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