PM Modi welcomes new two-tier GST reforms,says rate cuts will benefit common man, farmers, MSMEs

Prime Minister Narendra Modi on Wednesday welcomed the introduction of the new two-tier Goods and Services Tax (GST) structure, effective from September 22. PM Modi described the move as one that would benefit farmers, MSMEs, the middle class, women and youth. In a post on social media platform X, he called it a step towards next-generation GST reforms.

“During my Independence Day Speech, I had spoken about our intention to bring the Next-Generation reforms in GST. The Union Government had prepared a detailed proposal for broad-based GST rate rationalisation and process reforms, aimed at ease of living for the common man and strengthening the economy,” PM Modi said in a post on X.

PM Modi said the GST Council, which includes both the Union and State governments, had collectively agreed to the proposals submitted by the Centre. He added that the wide-ranging reforms “will benefit the common man, farmers, MSMEs, middle-class, women and youth.”

The comments came after Finance Minister Nirmala Sitharaman announced a major restructuring of the GST system, merging the existing 12% and 18% tax slabs into a simplified two-rate structure of 5% and 18%. Nearly all 12% and 28%



slab items shifted to lower rates.

A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes. The revised rates will come into effect from September 22, the first day of Navratri.

“These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has undergone a rigorous review, and in most cases, the rates have come down drastically. Labour-intensive industries have been given good support. Farmers and the agriculture sector, as well as the health sector, will benefit,” Sitharaman said at a late evening press conference.

Paratha, which is currently taxed at 18%, will now attract zero GST under the revised structure. Erasers, maps, pencil sharpeners and exercise books will be charged at nil from 5 per cent.

Consumer goods including tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture, and combs will now attract a reduced GST rate of 5%, down from 12%. Similarly, items such as shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap and hair oil will see their GST rate cut from 18% to 5%.