The next gen GST reforms will inject Rs 2 lakh crore into the economy, leaving people with more cash in hand that otherwise would have gone as taxes, said Finance Minister Nirmala Sitharaman.

Speaking at an outreach event in Visakhapatnam, Sitharaman detailed how the revised tax slabs, now streamlined to just 5 per cent and 18 per cent, had moved 99 per cent of goods previously taxed at 12 per cent down to the lower 5 per cent bracket, while 90 per cent of items in the top 28 per cent category had been shifted to 18 per cent.

“With this new two-slab regime, Rs 2 lakh crore is being injected into the economy. People will have more cash in hand,” she said, adding that this liquidity would otherwise had been collected as higher taxes.

The reforms, approved by the GST Council on September 3 and effective from September 22, marked the largest overhaul of the GST regime since its 2017 launch. Sitharaman said the government applied five key filters in finalising the changes -- prioritising the poor and middle class, addressing middle-class aspirations, supporting farmers, strengthening MSMEs and boosting job-creating and export-oriented sectors.

“India Inc is now voluntarily passing on the full benefits of GST rate cuts to consumers,” she added.

Sitharaman also highlighted the overall success of GST, citing a sharp rise in collections and compliance. Revenues climbed to Rs 22.08 lakh crore in FY25 from Rs 7.19 lakh crore in FY18, while the taxpayer base expanded from 65 lakh to 1.51 crore. This growth reflected the system’s maturity and the government’s commitment to a business-friendly tax environment, she added.