Jamshedpur, Sep 4: “The GST Council’s move to simplify the tax structure into fewer slabs is a phenomenal milestone. It will benefit ease of compliance, reduce litigation, ensure greater predictability and spur consumption growth. All sectors are set to benefit in a big way with this positive move,” said Sunil Tiwari, Chairman, CII Jharkhand State Council & Head – Plant Operations, Jamshedpur CV Works, Tata Motors Ltd.
Tiwari was reacting to the landmark decisions of the 56th GST Council meeting, which has rationalised the Goods and Services Tax structure into a more streamlined system. The Council approved the reduction of the existing four-tier GST structure to three main slabs—5% for essentials, 18% as the standard rate, and 40% for demerit goods such as luxury and sin items. The move, being described as “GST 2.0,” is set to come into effect from September 22, 2025.
Transparency and Growth-Oriented System
Diloo Parikh, Vice Chairman of CII Jharkhand State Council, described the GST Council’s decision as a defining step towards building a more transparent and growth-oriented tax regime. “The move to simplify the rate structure reflects a bold and pragmatic vision—one that puts both economic efficiency and citizen welfare at the centre of policymaking,” he said.
Parikh noted that with fewer tax slabs and targeted reductions, compliance will become simpler and litigation will reduce. This clarity is particularly important for MSMEs, which form the backbone of India’s economy by driving jobs, innovation, and local entrepreneurship. He added that the positive impact will ripple across sectors, lowering costs for end users and making operations smoother for industries like healthcare, agriculture, textiles, and services.
GST 2.0 and its Wider Impact
Vikash Mittal, Convenor of the CII Jharkhand Finance, Taxation & Economic Affairs Panel, called the decision a historic simplification. He said, “The 56th GST Council meeting has unveiled ‘GST 2.0’, replacing four tax slabs with two—5% for essentials and 18% for most goods and services, with a 40% levy on luxury and sin items. By lowering rates on FMCG products, consumer durables, healthcare, hospitality, and cutting GST on hotel rooms under ₹7500, the reform is expected to boost household consumption, tourism, and MSME competitiveness.”
Mittal highlighted that although the changes may result in a revenue dip of around ₹48,000 crore, the government expects this to be offset by higher compliance, buoyant demand, and stronger economic activity. He added that the reforms align with the government’s broader economic strategy, complementing recent tax and interest rate cuts aimed at stimulating demand in the economy.
A Decisive Push for Economic Growth
Arun A Gaur, Co-Convenor of the CII Jharkhand Finance, Taxation & Economic Affairs Panel, said the GST cut is a decisive shot in the arm for both consumers and businesses. “Lower taxes mean immediate price relief, which lifts real purchasing power and stokes demand across essentials and discretionary goods. As shelves move faster, factories will raise output, improving capacity utilisation and reducing inventories,” he explained.
Gaur further stated that higher sales will improve corporate cash flows, leading to wider profit pools available for reinvestment. This will eventually stimulate order books in capital goods, logistics, and construction, paving the way for a new cycle of private investment. MSMEs, he added, will gain from faster rotations and cheaper compliance, which will help create local jobs and deepen supply chains. Banks, too, are expected to respond positively by loosening credit for project finance, encouraged by cleaner balance sheets and stronger demand visibility.
The GST reforms also aim to support social welfare and inclusive growth. Exemptions on life and health insurance are expected to strengthen financial protection for households, while reduced GST on essential medicines and medical devices will make healthcare more affordable. The agriculture sector will benefit from lower rates on farm machinery and inputs, reducing the cost burden on farmers.
Labour-intensive sectors like textiles and footwear are also expected to gain, as duty corrections will improve competitiveness and employment generation. With institutional measures such as the GST Appellate Tribunal and faster refund mechanisms, the reforms address long-standing concerns of businesses about delays and compliance burdens.
Overall, the 56th GST Council meeting is being seen as a structural reset that aligns India’s taxation system with the broader goals of Viksit Bharat. By combining affordability, equity, and efficiency, the reforms lay a strong foundation for the next phase of inclusive economic progress.
Industry leaders across Jharkhand believe the move will unleash new growth opportunities by stimulating demand, improving competitiveness, and boosting investor confidence. As Sunil Tiwari summed it up, the GST Council’s decision to rationalise tax slabs is “a phenomenal milestone” that will create a simpler, fairer, and growth-oriented tax system for the nation.
