“The Finance Ministry does not retain this ₹2 lakh crore as tax revenue. Instead, it circulates back into the economy, stimulating domestic consumption,” she said. Lower prices from the two-slab structure are expected to encourage higher spending by consumers.
Boosting Jobs and Economic Activity
Explaining the economic impact, Ms. Sitharaman said that increased demand will prompt manufacturers to produce more, which in turn will create more jobs and expand the tax base through income and indirect taxes. “When consumers spend more, businesses grow, hire more people, and contribute further to government revenues. This virtuous cycle strengthens the economy,” she noted.
The Finance Minister also emphasized the growth of the taxpayer base since the introduction of GST in 2017. She said the number of entrepreneurs paying taxes rose from 65 lakh to 1.5 crore in eight years, countering claims that GST has been a “Gabbar Singh Tax,” as termed by Congress leader Rahul Gandhi.
Focus on MSMEs and the Poor
Ms. Sitharaman underlined that the reforms are particularly designed to support MSMEs and economically vulnerable sections. “Prime Minister Modi’s vision is to ensure that GST reforms largely benefit the poor, middle-class families, and MSMEs,” she said.
Responding to political criticism about previous GST rates, she clarified that the government had never imposed unnecessarily high taxes. “Neither the NDA government nor the Prime Minister is inclined to levy unjustified charges,” she added.
Key Takeaways
- GST slabs reduced from four to two to simplify taxation.
- Approximately ₹2 lakh crore expected to circulate back into the economy.
- Higher domestic consumption projected to generate more jobs.
- Entrepreneur tax base has grown from 65 lakh to 1.5 crore since 2017.
- MSMEs and middle-class families are key beneficiaries.
