Calling the reform part of his government’s 'Naagarik Devobhava' philosophy, the Prime Minister said that combining GST reductions with the income tax relief that came into effect earlier this year would help citizens save “over 12 lakh crore rupees.” He added: “That is why I am calling this a festival of savings.”
Published Sep 21, 2025 | 6:18 PM ⚊ Updated Sep 21, 2025 | 6:18 PM
Modi also claimed that the GST introduction was a “collaborating effort that brought together every stakeholder.”
Synopsis: Prime Minister Narendra Modi on Sunday defended the introduction of the GST, saying it replaced a complex and exploitative tax system with a unified structure that eased the burden on businesses and consumers. He also ‘congratulated the nation’ on the revised GST slabs, effective 22 September, which simplify rates to 5 percent and 18 percent. Describing the move as the start of a ‘festival of savings,’ he said the changes were made in the interest of the people and the nation.
Prime Minister Narendra Modi has called the revised Goods and Services Tax (GST) slabs, coming into effect from 22 September, a “next generation reform” in step with the times, one that launches a “festival of savings” for the nation’s poor and middle class.
In a livestream address on Sunday evening, a day before Navaratri begins, Modi said the new regime would simplify taxation, make essentials more affordable, and deliver a “double bonanza” to the middle class, emerging middle class, and the poor.
“From tomorrow, the festival of GST savings begins. During this festival, your savings will grow, and you will be able to purchase your favourite things more easily,” he said, asserting that the poor, middle class, youth, women, farmers, and retailers would all benefit from the reform, which he said would accelerate the nation’s growth and ensure that “every state comes along the path of development.”
Calling the reform part of his government’s ‘Naagarik Devobhava’ philosophy, the Prime Minister said that combining GST reductions with the income tax relief that came into effect earlier this year would help citizens save “over 12 lakh crore rupees.” He added: “That is why I am calling this a festival of savings.”
Under the new structure adopted by the GST Council earlier this month, the multiple existing rates will be streamlined into two slabs: 5 percent and 18 percent.
Goods and services earlier taxed at 12 percent will largely move to the 5 percent slab, while items taxed at 28 percent will shift to 18 percent. A new 40 percent slab has been created specifically for sin and luxury goods, including pan masala, tobacco, cigarettes, and aerated drinks with added sugar.
“Food and drink, medicine, soap, toothpaste, health and life insurance – many goods and services will either be tax-free or taxed at just 5 percent,” Modi stated.
“Reform is a continuous process. As times change and the country’s needs evolve, next-generation reforms become necessary. With this in mind, and looking at India’s present needs and future ambitions, GST’s new reforms are being implemented.”
The reforms, announced amid a growing standard-of-living crisis and inflation, have been seen as a rollback of the Modi government’s aggressive GST regime of previous years.
In his address, the Prime Minister defended the introduction of GST in 2017 as a turning point, contrasting it with what he described as a purportedly chaotic and exploitative system that existed earlier.
“For decades, citizens had been trapped in a maze of taxes: sales tax, VAT, service tax, and more. To send goods from one town to another, you had to navigate multiple checkposts, complete countless forms, face endless stoppages, and meet diverse requirements,” he said.
“In 2014, when the country elected me as Prime Minister, there was one striking example. A company attempting to send goods just 570 kilometres from Bengaluru to Hyderabad found it would be easier to send them via Europe first. That was the reality of the tax and toll maze back then. I cite one example, but there were lakhs of companies, and crores of citizens, facing daily hardships under these taxes.”
Modi also claimed that the GST introduction was a “collaborating effort that brought together every stakeholder.”
“The costs of transporting goods ultimately fell on ordinary citizens. Consumers, like you, were being exploited. That was why this system needed change. And that is why, after the 2014 election, in the interest of the people and the nation, GST was introduced,” he said.
“We consulted every stakeholder, addressed every doubt, and brought together the states to implement the largest tax reform in independent India. It was the result of genuine collaboration between the centre and the states.”
The Prime Minister also stressed that revised GST slabs, along with the revised income tax slabs announced earlier this year, were measures that particularly favoured the middle class and the poor.
“Over the past 12 years, 25 crore people have moved out of poverty to form a new middle class, with its own aspirations and dreams. This year, the government has made incomes up to 12 lakh rupees tax-free, offering significant relief. These measures simplify life for the middle class and make it more convenient,” he said.
“Now it is the turn of the poor and the new middle class. In many ways, the middle class, the new middle class, and the poor are enjoying a double bonanza through GST reforms and income tax relief. Citizens will find it easier to realise their dreams, whether it is building a home, buying a TV, fridge, scooter, bike, or car. You will spend less on everything. Travel will now be cheaper, and GST on most hotels has been reduced.”
The benefits of the “next-gen GST” reforms would also significantly help retailers and businesses, especially micro, small, and medium enterprises (MSMEs), Modi said.
“I am pleased that the GST reforms will improve the livelihoods of retailer brothers and sisters. They are actively participating to ensure the benefits of the reforms reach consumers. In many places, they are putting up boards to inform customers of the price differences compared with before,” he said.
“Because of the GST reforms, the number of rules has decreased, and the tax burden has lessened, making it easier for our MSMEs to contribute to an Atmanirbhar Bharat by producing within the country. Their businesses will improve, and they will pay fewer taxes. It is a double bonanza for them as well.”
He further appealed to businesses to use the reforms to help realise the Modi government’s flagship Atmanirbhar Bharat initiative to boost domestic manufacturing.
“I have high expectations for our MSMEs. At the height of India’s prosperity, the backbone of our economy was our MSMEs. Products made in India were of the highest quality, and to return to those glory days, we must work towards that goal,” he said.
“Just as the independence movement drew strength from the swadeshi movement, our quest for prosperity must draw power from swadeshi manufacturing and self-reliance.”
The Prime Minister also urged citizens to prioritise Indian goods.
“In our daily lives, so many foreign goods are entwined with us. We often do not even realise whether what we carry in our pockets is Indian or not. We must strive to change that. We must buy products made in India, crafted by the sweat of our own sons and daughters,” he said.
“Say it with pride: ‘I will only buy swadeshi, and I will only sell swadeshi products.’ I also urge all state governments to keep the goals of Atmanirbhar Bharat and swadeshi manufacturing in mind, and to give a boost to industries in their states. When states and the centre move together, the dream of Atmanirbhar Bharat will be realised. Every state will develop, and India will develop.”
(Edited by Dese Gowda)
