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Lower GST will boost India's economy significantly, says FM Nirmala Sitharaman.


Date: 06-09-2025
Subject: Lower GST will boost India's economy significantly, says FM Nirmala Sitharaman
The new dual-slab goods and services tax (GST) structure adopts a next-generation approach to dealing with indirect taxation and will boost the economy significantly, Union finance minister Nirmala Sitharaman said. The government is preparing a package for US tariff-affected export sectors and the next wave of policy changes is being worked on at "relentless" pace, she said.

In a wide-ranging interview after she announced a simpler GST regime, Sitharaman said the government was seized of the need to diversify the economy in view of recent challenges.

On issue of relaxations in Press Note 3, she said it was being discussed. The government has already provided some visa flexibility in respect of domain exports needed for projects that are on the ground, in the renewables sector and so on. Press Note 3 makes prior government nod mandatory for investments from countries India shares land borders with, such as China.

"It (GST) will have a very positive impact on the Indian economy, its growth numbers and so on because this affects every one of the 1.4 billion people," the FM said, adding that industry has said it would pass on the benefits of GST cut. "Anything you do, anything you purchase for the kitchen or household, or vehicle... everything is touched by GST. So, it will certainly have an impact."

The new GST structure that takes effect September 22 will have two rates - 5% and 18%. Select sin and luxury goods will be taxed at 40%.


India's economy grew by a better-than-expected, five-quarter high of 7.8% in the June quarter but faces headwinds from higher US tariffs. Lower GST is expected to spur demand and counter the impact. "This reform was not intended to address the tariff-related challenges," Sitharaman said. But "as a collateral or unintended consequence, it will help those impacted by tariffs in facing this challenge."

She said the government will examine GST transition issues in the coming days. For the US "tariff-hit sectors, something is being worked out," the FM said, adding, "I don't want to give a time and build an expectation."

"Sectors which are hit by tariffs, those sectors would have approached their respective ministries," she said. "The respective ministries, in turn, are working to come up with the package."

As for Russian oil imports, India will not be dictated to on matters of national interest, the minister said.

The government is working on next-gen reforms announced by the PM in his Independence Day speech, the minister said. "Relentless work on reforms is happening," she said. "Reforms as an agenda is never off the table."

FM said the rupee depreciation was only against the US dollar and the RBI was acting on it.


Source Name : Economic Times

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