GST Reset Promises Long-Term Economic Transformation

India's sweeping GST reset aims to simplify taxes and boost investments nationwide

- ABHINANDAN MISHRA

India's GST reforms announced on 3 September have been described by the government as the biggest reset since the system was launched, and the long-term impact is expected to stretch far beyond what becomes cheaper or costlier today.

Official sources told the Sunday Guardian that the benefits of these reforms, which follow the announcement made by Prime Minister Narendra Modi during his 15 August Independence Day speech, while coming into effect from 22 September and showing quick results, will be felt most in the coming decades and will put India among the countries that have a simple and modern tax regime.

These reforms, officials believe, will start showing results at a macro level vis-à-vis increase in foreign investments in the coming 6–8 months. The 56th meeting of the GST Council was held in New Delhi under the chairpersonship of the Union Finance & Corporate Affairs Minister Nirmala Sitharaman.

The GST Council has collapsed the clutter of rates into just four—nil, five and eighteen percent, with a sharply targeted forty percent band for luxury and sin goods. For the ordinary consumer, this means milk, paneer, breads and medicines fall into the tax-free basket, most everyday products settle at five or eighteen percent, and only a handful of goods like luxury cars, aerated drinks or tobacco face the steepest levy. Officials described this as not just a simplification, but as a signal of intent to protect consumers, increase consumption, production, manufacturing and investment.