‘GST 2.0 a Huge Gift to People,’ Says Ashwini Vaishnaw, Hails PM Modi’s New Reforms

Prime Minister Narendra Modi has introduced GST 2.0, a revamped version of the Goods and Services Tax aimed at transforming India’s economic framework. The reforms target enhanced affordability for middle- and lower-income groups alongside stimulating nationwide economic expansion. Ashwini Vaishnaw, Union Electronics and IT Minister, emphasized the reforms’ synergy with prior income tax relief measures for earnings under ₹12 lakh. He projected a potential 10% consumption surge equivalent to ₹20 lakh crore in GDP growth through GST rationalization, stating: “With India’s GDP at ₹330 lakh crore, nearly ₹202 lakh crore comes from consumption. A consumption spike of this magnitude would substantially accelerate economic progress.”

Approved during the 56th GST Council meeting, GST 2.0 shifts from a four-tier tax structure (5%, 12%, 18%, 28%) to a simplified two-slab system of 5% and 18%, effective September 22, 2025. This overhaul seeks to lower costs for essentials, ease business compliance, and drive consumption-led economic momentum.

Responding to opposition critiques, Finance Minister Nirmala Sitharaman questioned why GST structural reforms weren’t proposed earlier during the UPA era, referencing India’s 1991 economic reforms. She affirmed the government’s diligence in evaluating feedback: “Despite external pressures amplified through social media, we ensured objectivity throughout this eight-month reform process,” likening the effort to revitalizing a reservoir by removing “old muck” to inject new vitality.

Economic Impact and Industry Reactions

The reforms represent a systemic revamp rather than incremental tweaks. Reliance Industries Chairman Mukesh Ambani termed GST 2.0 pivotal for India’s consumption economy, committing to transparently pass savings to consumers—a move positioning Reliance Retail as a stakeholder in national development.

Automotive leaders anticipate smoother transitions, with VE Commercial Vehicles’ Vinod Aggarwal expecting government clarifications on compensation cess utilization for unsold inventory. EKA Mobility’s Dr. Sudhir Mehta highlighted streamlined logistics and ecosystem growth opportunities from revised input costs.

Rural demand is projected to rebound as reduced input prices and improved access stimulate farm-sector consumption. This synergy with subsidy programs could alleviate fiscal burdens, freeing resources for agricultural infrastructure upgrades.

Sectoral Benefits and Historical Context

Real estate stands to gain from lower cement and steel costs, easing developer expenses and enhancing project feasibility. Simplified tax compliance is expected to accelerate processes, with benefits gradually reaching homebuyers.

GST exemptions on life and health insurance mark a milestone toward financial inclusion. PhonePe Insurance CEO Vishal Gupta welcomed the alignment with IRDAI’s “Insurance for All by 2047” vision, emphasizing affordability and accessibility.

GST 2.0 builds on the 2017 tax overhaul by addressing slab complexities and compliance hurdles. The refined structure aligns with global practices while easing living costs—particularly for lower-income households via reduced taxes on essentials like food, health coverage, and farm inputs.