‘Rate cuts should be passed on to the janta, confident benefits would reach common man’: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Friday stated that following the rollout of GST 2.0 on September 22, the government’s top priority would be to ensure that consumers benefit directly from tax rate reductions. Speaking exclusively to India Today TV, Sitharaman emphasized that strict monitoring would be in place to verify whether industries, including insurance, fully transfer these benefits to the people.

“Our main focus will be on ensuring that rate cuts are passed on to the janta. We have a lot of work post-22nd September. It is a big vigilance exercise and we are confident the benefits will reach the common man,” she said.

According to the Finance Minister, industry representatives, including insurers and public sector firms, have committed to passing on the benefits. “If any company says otherwise, we will talk to them. Consumption will increase, and so will incomes,” she remarked.

Sitharaman highlighted that GST 2.0 has been structured with the middle class at its core. “Common man and middle class — their basic necessities and aspirations are the main focus for GST reforms,” she noted.

FM Sitharaman added that Prime Minister Narendra Modi’s drive for GST reforms stemmed from his commitment to reducing the tax burden on ordinary citizens. She noted that PM Modi had laid out clear directions for GST 2.0 in his Independence Day speech from the Red Fort, describing the reforms as a measure crafted for “140 crore Indians.”

Earlier this week, the GST Council, chaired by Sitharaman, approved a major revamp of India’s indirect tax system. Starting September 22, the structure will be simplified to just two slabs — 5% and 18% — from the previous four. Essentials such as food, education, healthcare, and popular consumer durables like TVs and refrigerators will be taxed at lower rates, while ultra-luxury and sin goods move into the 40% category.

The reforms reduce taxes on many items central to middle-class households. Products such as small cars, LED televisions, air conditioners, chocolates, cinema tickets, and stationery will now fall under the 18% slab. Everyday essentials, like soaps, shampoos, toothpaste, toys, candles, and shaving kits have been reduced to 5%, from earlier rates of 12–18%. Healthcare has also received a major boost, with life and health insurance premiums exempted from GST. Additionally, 33 critical medicines for cancer and rare diseases are now tax-free, while diagnostic kits, thermometers, and common drugs will attract only 5%.

Responding to opposition criticism, including the Congress’s earlier description of GST as a “Gabbar Singh tax,” Sitharaman said: “Congress, which once imposed 91% tax, now calls GST names. GST 1.0 was for unity, GST 2.0 is for simplicity, and the third stage will take this simplicity forward.”

She also addressed regional concerns raised during consultations. In Bihar, she termed GST 2.0 a “double dhamaka” ahead of Chhath and Diwali, pointing to tax relief on education and household expenses. In Tamil Nadu, she clarified that ongoing education remains exempt, but commercial coaching is not included under that category.