'Bold and visionary': Amitabh Kant says GST overhaul will fuel jobs, growth
The reform will fuel job creation, lift household incomes, and trigger a virtuous cycle of growth, says Amitabh Kant
- Sep 3, 2025,
- Updated Sep 3, 2025 11:14 PM IST
Former NITI Aayog CEO Amitabh Kant has described the Goods and Services Tax (GST) Council's rationalisation of tax slabs as a "landmark reform," calling it a bold move that will boost consumption, investment and job creation.
"The reduction of GST rates to just 5% and 18% is a bold and visionary step. Simplifying the structure, rationalising rates and eliminating inverted duties will boost consumption, raise capacity utilisation, and drive fresh investment. This, in turn, will fuel job creation, lift household incomes, and trigger a virtuous cycle of growth," Kant said in a post on X.
He added that the timing of the reform gives India's economy fresh momentum. "At this critical juncture, this reform gives India’s economy renewed momentum. This transformative move will accelerate our journey towards sustained prosperity. Congratulations to PM @narendramodi, FM @nsitharaman, GST Council and to the Revenue Department," Kant said.
The former bureaucrat said that he was particularly heartened that the inverted duty structure on man-made fibres had been eliminated. "Globally Man Made Fibres (MMFs) dominate, and India now has the chance to secure a strong foothold. The textiles sector can generate millions of jobs and this is a vital first step. The next must be removal of the quality control orders so India can emerge as a true champion of MMFs."
Equally significant is the decision to keep GST on EVs at just 5%, he added. "This nascent industry requires policy stability to scale up domestic capabilities and attract long-term investment. With predictable and consistent policies, India can accelerate the shift to clean mobility and become a global hub for EV manufacturing."
The Council, chaired by Finance Minister Nirmala Sitharaman, scrapped the 12 per cent and 28 per cent slabs and approved a dual structure of 5 per cent and 18 per cent, with a new 40 per cent rate reserved for sin and luxury goods. The decision follows Prime Minister Narendra Modi's Independence Day declaration that "next-generation GST reforms" would be rolled out by Diwali. The new structure takes effect on September 22, ahead of Navratri and Diwali.
Sitharaman said the move went beyond rate rationalisation. "The PM set the tone for the next generation reforms on August 15 when he spoke at the Red Fort and he desired we give the benefit to the people at the earliest. This reform is not just on rationalising rates, it’s also on structural reforms and ease of living. We have corrected inverted duty structure, we have resolved classification issues and we have ensured predictability and stability of GST,” she told reporters.
The reforms are expected to deliver immediate relief to households. Hair oil, shampoo, soap, toothpaste, toothbrushes, bicycles, tableware, kitchenware and other essentials will now be taxed at 5 per cent instead of 12–18 per cent. Food items such as ultra-high temperature milk, paneer, and all Indian breads are exempt, while namkeens, sauces, noodles, chocolates, pasta and butter ghee will attract 5 per cent GST.
Healthcare has received a major boost. All individual health and life insurance policies, as well as reinsurance, are now exempt. Thirty-three life-saving medicines, thermometers, medical oxygen and diagnostic kits will also carry zero GST, while spectacles and glucose meters are capped at 5 per cent.
Education items including maps, charts, globes, pencils, crayons, notebooks and erasers are tax-free. Farmers benefit with reductions on tractors, tyres, bio-pesticides, micronutrients and drip irrigation systems. Renewable energy devices like windmills, solar water heaters, biogas plants and solar cookers now attract just 5 per cent GST, down from 12.
On automobiles, petrol, LPG and CNG cars up to 1200cc, diesel cars up to 1500cc, motorcycles below 350cc, three-wheelers and transport vehicles have moved into the 18 per cent bracket from 28 per cent. Larger cars, high-end motorcycles, yachts, and helicopters for personal use will fall under the new 40 per cent slab.
Luxury and sin goods such as cigarettes, pan masala, gutkha, chewing tobacco, zarda and carbonated drinks will also be taxed at 40 per cent, with GST levied directly on retail sale prices.
Former NITI Aayog CEO Amitabh Kant has described the Goods and Services Tax (GST) Council's rationalisation of tax slabs as a "landmark reform," calling it a bold move that will boost consumption, investment and job creation.
"The reduction of GST rates to just 5% and 18% is a bold and visionary step. Simplifying the structure, rationalising rates and eliminating inverted duties will boost consumption, raise capacity utilisation, and drive fresh investment. This, in turn, will fuel job creation, lift household incomes, and trigger a virtuous cycle of growth," Kant said in a post on X.
He added that the timing of the reform gives India's economy fresh momentum. "At this critical juncture, this reform gives India’s economy renewed momentum. This transformative move will accelerate our journey towards sustained prosperity. Congratulations to PM @narendramodi, FM @nsitharaman, GST Council and to the Revenue Department," Kant said.
The former bureaucrat said that he was particularly heartened that the inverted duty structure on man-made fibres had been eliminated. "Globally Man Made Fibres (MMFs) dominate, and India now has the chance to secure a strong foothold. The textiles sector can generate millions of jobs and this is a vital first step. The next must be removal of the quality control orders so India can emerge as a true champion of MMFs."
Equally significant is the decision to keep GST on EVs at just 5%, he added. "This nascent industry requires policy stability to scale up domestic capabilities and attract long-term investment. With predictable and consistent policies, India can accelerate the shift to clean mobility and become a global hub for EV manufacturing."
The Council, chaired by Finance Minister Nirmala Sitharaman, scrapped the 12 per cent and 28 per cent slabs and approved a dual structure of 5 per cent and 18 per cent, with a new 40 per cent rate reserved for sin and luxury goods. The decision follows Prime Minister Narendra Modi's Independence Day declaration that "next-generation GST reforms" would be rolled out by Diwali. The new structure takes effect on September 22, ahead of Navratri and Diwali.
Sitharaman said the move went beyond rate rationalisation. "The PM set the tone for the next generation reforms on August 15 when he spoke at the Red Fort and he desired we give the benefit to the people at the earliest. This reform is not just on rationalising rates, it’s also on structural reforms and ease of living. We have corrected inverted duty structure, we have resolved classification issues and we have ensured predictability and stability of GST,” she told reporters.
The reforms are expected to deliver immediate relief to households. Hair oil, shampoo, soap, toothpaste, toothbrushes, bicycles, tableware, kitchenware and other essentials will now be taxed at 5 per cent instead of 12–18 per cent. Food items such as ultra-high temperature milk, paneer, and all Indian breads are exempt, while namkeens, sauces, noodles, chocolates, pasta and butter ghee will attract 5 per cent GST.
Healthcare has received a major boost. All individual health and life insurance policies, as well as reinsurance, are now exempt. Thirty-three life-saving medicines, thermometers, medical oxygen and diagnostic kits will also carry zero GST, while spectacles and glucose meters are capped at 5 per cent.
Education items including maps, charts, globes, pencils, crayons, notebooks and erasers are tax-free. Farmers benefit with reductions on tractors, tyres, bio-pesticides, micronutrients and drip irrigation systems. Renewable energy devices like windmills, solar water heaters, biogas plants and solar cookers now attract just 5 per cent GST, down from 12.
On automobiles, petrol, LPG and CNG cars up to 1200cc, diesel cars up to 1500cc, motorcycles below 350cc, three-wheelers and transport vehicles have moved into the 18 per cent bracket from 28 per cent. Larger cars, high-end motorcycles, yachts, and helicopters for personal use will fall under the new 40 per cent slab.
Luxury and sin goods such as cigarettes, pan masala, gutkha, chewing tobacco, zarda and carbonated drinks will also be taxed at 40 per cent, with GST levied directly on retail sale prices.