GST 2.0 comes into effect today, September 22 (Monday), coinciding with the start of Navratri. Prime Minister Narendra Modi called the reforms a big and important step for Atmanirbhar Bharat, saying they will accelerate India’s growth story and strengthen swadeshi products. “On the first day of Navratri, the country is going to take an important and big step for Atmanirbhar Bharat. With the sunrise tomorrow, the next generation GST reforms will come into effect. A 'GST bachat utsav (savings festival)' will begin tomorrow,” he said.

Modi calls it a ‘savings festival’

In his 19-minute address to the nation on Sunday evening, Modi described the reforms as a “bachat utsav”. “From tomorrow, it will be like a GST saving festival,” he said. “You will be able to buy things you like more easily. The poor, middle class, neo middle class, youths, farmers, women, traders and shopkeepers will benefit from this.”

He said the revised GST rates reflect his government’s mantra of “naagrik devo bhawah” (citizens are like gods) as they will reduce prices of daily-use items, besides lowering costs in construction and health sectors.

Double bonanza for citizens

Modi linked the reforms with the earlier move to raise the income tax exemption limit to Rs 12 lakh. He said the two measures would save citizens Rs 2.5 lakh crore. Calling it a “double bonanza”, he added that the decisions would reduce household expenditure and increase savings.

Cheaper goods and services

With GST 2.0, nearly 99 per cent of items previously taxed at 12 per cent now fall into the 5 per cent slab. Everyday goods like food items, medicines, soap, toothbrush, toothpaste, and health and life insurance will either be tax-free or attract only 5 per cent.

Mass consumption items such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee and ice creams will also get cheaper. Aspirational goods including televisions, air-conditioners and washing machines will see reduced rates. From kitchen staples to electronics, from medicines to automobiles, goods and services will cost less.

Two-tier GST structure

The new system introduces a two-tier GST structure, with most goods and services taxed at 5 and 18 per cent. Ultra-luxury items will attract 40 per cent tax, while tobacco and related products will remain under 28 per cent plus cess. Earlier, GST was levied at four slabs of 5, 12, 18 and 28 per cent, with compensation cess on luxury and sin goods.

Push for swadeshi

Urging people to support indigenous products, Modi said, “We have to make every home a symbol of swadeshi. We have to decorate every shop with swadeshi (goods).” He added that swadeshi would bring prosperity just as it strengthened the freedom movement. “One should be proud in saying that ‘I buy swadeshi’ or ‘I sell swadeshi’,” he said.

He cautioned that foreign goods had unwittingly become part of daily life, even in simple items such as combs, and urged citizens to consciously choose made-in-India products.

Boost to MSMEs and manufacturing

Highlighting the role of micro, small and cottage industries, Modi said they would be crucial in building a self-reliant India. He asked MSMEs to work towards restoring the glory of made-in-India goods. Modi also urged states to encourage manufacturing and create a conducive atmosphere for investment. “When the Centre and states work together, the dream of a self-reliant India will be realised,” he said.

Growth, investment and ease of doing business

Modi congratulated citizens on the reforms. “These reforms will accelerate India’s growth story, increase ease of doing business and attract more investors,” he said. He recalled how GST in 2017 realised the one nation-one tax dream by dismantling the complex web of levies and tolls that had burdened traders and consumers for decades.

He shared an example from 2014, where a company found it more challenging to transport goods from Bengaluru to Hyderabad than to Europe due to multiple taxes. Modi said his government worked with states and stakeholders to address concerns before implementing GST.