GST Utsav is a new festival of savings for all countrymen, launched by Prime Minister Narendra Modi, as he announced the next generation of GST reforms.
Prime Minister Narendra Modi on Sunday announced a nationwide “GST Utsav” to begin on Monday, the first day of Navratri, calling it a “festival of savings” for all Indians. The announcement came as India prepares to implement the most significant overhaul of its Goods and Services Tax (GST) regime since its launch in 2017.
In a televised address, PM Modi stated that the “Next Gen GST reforms” coming into effect from September 22 will allow people to buy their favorite items at lower prices. “From tomorrow, you will be able to buy your favourite items with ease. This is like a GST saving festival for every Indian,” he said.
The Prime Minister emphasized that the new GST structure will directly benefit the common man, farmers, MSMEs, middle-class families, women, and the youth, offering a “double benefit” of savings and ease of living. He termed the reforms a major step towards an Aatmanirbhar Bharat (self-reliant India).
From Complexity to Simplicity: The Shift to GST 2.0
The new system, often referred to as “GST 2.0,” represents a major simplification of India’s indirect tax structure. The previous four-slab system (5%, 12%, 18%, and 28%) has been rationalized into a streamlined two-slab framework of 5% and 18%. An additional 40% rate has been introduced for super-luxury, sin, and demerit goods to maintain revenue while providing significant relief to the common consumer.
This reform, cleared by the GST Council at its 56th meeting with a consensus between the Union and state governments, is a landmark move aimed at correcting historical inefficiencies. PM Modi recalled the pre-2017 era when a web of taxes like excise, VAT, and octroi created bottlenecks for businesses and consumers. He highlighted that GST was a result of cooperative federalism, and the new reforms are an evolution of that spirit.
What Indians Will Save: The Impact on Your Wallet
The GST rate cuts, effective from Monday, will make a wide range of products and services cheaper, directly increasing the disposable income of households. Here’s a detailed look at how the changes will benefit different sections of society:
For the Common Man and Households:
- Daily Essentials: A large number of daily-use items, previously taxed at 12% or 18%, have been moved to the 5% slab. This includes items like hair oil, soaps, shampoos, toothpaste, butter, ghee, cheese, and various packaged food items like namkeen, biscuits, and sauces.
- Appliances: Consumer durables like air-conditioners, refrigerators, and large televisions (above 32 inches), which were in the highest 28% slab, will now be taxed at 18%. This significant reduction will make big-ticket purchases more affordable, especially during the festive season.
- Services: Services of everyday use will also become cheaper. GST on salons, gyms, barbers, and yoga centers has been reduced from 18% to 5%. Hotel stays up to Rs 7,500 per day will also see a tax cut from 12% to 5%.
For Healthcare and Education:
- Medicines: More than 30 life-saving drugs and diagnostic kits will now attract zero GST. Other medicines, including those from Ayurveda and Unani, will see their rates reduced to 5%. Medical devices like glucometers and corrective goggles will also be cheaper.
- Health Insurance: A long-standing demand has been met with the complete exemption of GST on premiums for individual life and health insurance policies. This will make health protection more accessible and affordable for the middle class.
- School Supplies: Items such as pencils, erasers, crayons, and notebooks will now be exempt from GST, providing relief to students and parents.
For Farmers and MSMEs:
- Agriculture: GST on tractors has been reduced from 12% to 5%. Essential farm machinery like harvesters, threshers, and drip irrigation equipment will also move to the lower 5% slab. This is expected to significantly reduce input costs for farmers.
- Industry: The GST on cement has been cut from 28% to 18%, which is expected to boost the construction and infrastructure sectors. Rates on certain raw materials and intermediate goods have also been rationalized to correct the inverted duty structure and support domestic manufacturing.
- Ease of Doing Business: The reforms also include procedural simplifications, such as faster registration for non-risky businesses and quicker refunds, which will particularly benefit MSMEs and exporters.
A Catalyst for Economic Growth
The Finance Ministry estimates that the GST rate cuts will inject an estimated ₹2 lakh crore into the economy, putting more cash in the hands of consumers. This is expected to stimulate demand, boost production, and create a positive cycle of growth and employment.
Industry leaders and economists have widely welcomed the move, noting that the simplification will reduce classification disputes and compliance burdens. The new tax structure is poised to not only make goods cheaper but also strengthen India’s economic foundation, paving the way for sustained, consumption-led growth. As India celebrates Navratri, the “GST Utsav” promises to be a true festival of savings, marking a new, more prosperous chapter for the nation.
FAQs
1. What is GST Utsav and the new ‘GST 2.0’ reforms?
The “GST Utsav” is the name given by Prime Minister Narendra Modi to the new phase of GST reforms. It’s described as a “festival of savings” because the changes, which take effect from September 22, 2025, will make many essential goods and services cheaper for consumers. These reforms, often called “GST 2.0,” simplify India’s indirect tax structure from four main slabs (5%, 12%, 18%, and 28%) to a new, simpler two-slab system of 5% and 18%. An additional 40% rate has been created specifically for luxury and “sin” goods like tobacco, certain high-end automobiles, and aerated beverages.
2. How will these changes benefit the common man?
The new reforms are designed to increase household savings and boost consumption by lowering taxes on a wide range of products and services. The tax on most household goods, including soaps, hair oil, toothpaste, and packaged foods like biscuits and namkeen, has been reduced to 5%.
The GST on consumer durables such as air conditioners, refrigerators, and large-screen TVs has been cut from 28% to 18%. This makes them significantly more affordable.
3.What is the economic impact of these reforms?
The GST reforms are expected to inject an estimated ₹2 lakh crore into the Indian economy. By making goods and services more affordable, the government aims to stimulate domestic demand and consumption. This is anticipated to lead to a positive cycle of increased production, improved business profitability, and job creation. The simplification of the tax structure will also benefit Micro, Small, and Medium Enterprises (MSMEs) by reducing compliance burdens and lowering input costs. The move is a strategic step towards a consumption-led growth model and is seen as a major stride towards strengthening India’s economy.