Next-Gen GST Reforms Boost Sectoral Sales, Says FM Nirmala Sitharaman

Mumbai | November 12

India’s next-generation Goods and Services Tax (GST) reforms are starting to deliver visible results, with Finance Minister Nirmala Sitharaman stating that the recent overhaul has fuelled sales across automobiles, consumer durables, and e-commerce.

Sitharaman said the new framework—rolled out on 22 September 2025—marks a significant step in making GST simpler, fairer, and more accessible to small and medium enterprises. She added that the Ministry of Finance remains focused on ensuring that the reforms strengthen consumption and support the wider economic growth cycle.

“Prime Minister Narendra Modi has consistently emphasised that small traders must benefit most from GST reforms, as they are the ones who carry India’s products to the farthest corners of the country,” the finance minister said.

The government has now restructured the GST system into two primary slabs of 5 per cent and 18 per cent, while maintaining a 40 per cent rate on so-called “sin goods” such as tobacco and luxury products. Officials said the reduced complexity will improve compliance, lower disputes between states, and make India’s indirect-tax structure more transparent.

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Simpler Tax Structure, Stronger Fiscal Discipline

According to Sitharaman, the reforms have contributed to rising consumption and a stronger fiscal outlook. She reiterated that the government is on track to meet its FY 2025-26 fiscal-deficit target of 4.4 per cent of GDP, down from 4.8 per cent last year. The Union Budget presented in February pegged the deficit at ₹15.69 lakh crore.

“The next focus is maintaining a healthy debt-to-GDP ratio, which is projected to decline to 56.1 per cent in FY 2026,” she said. “For achieving Viksit Bharat, we must consciously remain on the path of reform and fiscal responsibility.”

Officials at the Ministry said that simplification of GST, combined with sustained digitalisation, will not only increase compliance but also strengthen revenue efficiency. The ongoing use of data analytics to track tax payments and detect mismatches has already improved collections.

Economists note that the streamlined GST structure and rising tax buoyancy support India’s commitment to prudent fiscal management without hampering growth. A combination of higher consumption, resilient indirect-tax inflows, and moderate spending is expected to help the government maintain its fiscal glide path.

Reform Momentum to Continue

The Finance Ministry plans additional rounds of GST reforms focused on digital integration, automated filing, and inter-state harmonisation, particularly for small businesses that often face procedural bottlenecks.

Officials also said the reform roadmap aligns with India’s broader economic priorities-enhancing ease of doing business, boosting domestic manufacturing, and improving tax transparency. As part of the next phase, the government will work on simplifying return filing, rationalising exemptions, and further integrating GST with other indirect-tax systems to ensure seamless operations across states.

Sitharaman said the government will continue to refine GST systems “in the spirit of cooperative federalism,” with inputs from states and industry stakeholders.