Prices of 400 goods to crash from Sep 22: Sitharaman calls GST reform a game-changer

New Delhi: India deserves a better opposition and better opposition leaders, Finance Minister Nirmala Sitharaman said on Saturday, as she slammed their criticism of the Modi government on the GST reforms as "ill-informed" and untouched by facts leading up to the implementation of the unified indirect tax regime in 2017.

She described the landmark GST overhaul as a “people’s reform”, asserting that the sweeping rate rationalisations will benefit every Indian household, boost consumption, and further strengthen the economy.

In an interview with PTI, Sitharaman said she will personally monitor the implementation of GST rate cuts to ensure that the benefits are passed on to consumers through price reductions. However, she also noted that early signs from industry were encouraging.

“This is a reform which touches the lives of all 140 crore people. There is no individual in this country who is untouched by GST. The poorest of the poor also have something small that they buy, touched by GST,” Sitharaman said.

Nearly 400 goods to get cheaper from September 22

The massive rate rejig will come into effect from September 22, coinciding with the first day of Navaratri. Nearly 400 products — ranging from soaps to cars, shampoos to air conditioners, tractors to cream buns — will see reduced tax rates.

Additionally, premiums paid on individual health and life insurance will become tax-free, providing further relief to families. A new 40 per cent GST slab has been created exclusively for sin goods and ultra-luxury items.

Simplified GST slab structure

With this overhaul, the government has eliminated the 12% and 28% slabs, leaving a streamlined structure of 5% for common-use goods and 18% for others. Essential items like bread, milk, and paneer will attract no tax.

“People do understand for example, Rs 100 with which they go to the shop to buy a thing. Today, the same Rs 100 they can buy one and a half of the commodity. Earlier, they bought one,” the Finance Minister said, underlining the impact on household budgets.

Prices already falling, says FM

Sitharaman pointed out that many companies have already begun slashing prices in response to the GST reforms. “From car makers to public sector insurance companies and shoe and apparel brands, significant price cuts have already been announced,” she said, adding that more are expected by the time the new rates take effect.

“There is not going to be one family that is going to be without this positive impact of the GST touching them... 140 crore people are going to benefit from this in one way or the other. So this will boost consumption, and as a result, I think the virtuous cycle will start,” she added.

Monitoring mechanism and industry response

Addressing concerns about whether businesses will pass on the benefits, Sitharaman said her ministry has been actively engaging with industry and trade bodies.

“They’ve all come out openly to say we will pass this on. So, I can see the positivity from industry and trade... I'm very confident they will pass it on,” she said.

“I have said from September 22 my main focus in my job would be to watch out and see if it is getting passed on and where it is not getting passed on, I will engage with industry and say that they have to.”

A boost for consumption, and beyond

Sitharaman emphasised that the GST rate cuts, combined with the significant income tax relief announced in the 2025–26 Union Budget, will leave more disposable income with people and encourage greater spending.

“On inflation, it is already well under control and this cut in the GST will actually bring people out to consume more. There is no doubt about it,” she said.

Business-friendly reforms for SMEs

Beyond rate cuts, the overhaul also includes simplified compliance procedures, faster refunds, and easier registration, particularly benefiting small and medium enterprises (SMEs).

Under the new norms, 90 per cent of refunds will be processed within a stipulated time, and business registrations will be completed within three days.

The reforms also aim to eliminate confusion over the classification of products, bringing similar items under the same tax bracket.

One example cited by Sitharaman is popcorn. “Popcorn mixed with salt and spice will attract five per cent tax, irrespective of whether it is sold loose or pre-packed,” she said. Previously, salted pre-packed popcorn was taxed at 12%, while caramel popcorn was taxed at 18%.

Another example is cream buns, which will now attract a uniform 5 per cent tax, down from 18 per cent, resolving earlier confusion when cream and buns were taxed separately at 5%.

“Every tax on daily use items has gone through a rigorous review and in most cases the rates have come down drastically,” Sitharaman said, reiterating that the reform has been carried out with a common man-first approach.