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Eight months ago, PM Modi initiated talks on GST reform: FM Nirmala Sitharaman
The government this week scrapped the 12% and 28% tax slabs, leaving only two broad rates — 5% and 18%. The new structure will take effect from September 22, 2025
Union Finance Minister Nirmala Sitharaman reveals how idea of ‘GST 2.0’ was coined.
Union Finance Minister Nirmala Sitharaman, in her first interview after the mega overhaul of India’s Goods and Services Tax (GST) system, revealed that Prime Minister Narendra Modi first suggested the revamp eight months ago.
“Eight months ago, the PM called me and asked how GST could be revamped. Around Budget 2025, he reminded me again,” Sitharaman told Network18 Group Editor-in-Chief Rahul Joshi in an exclusive conversation.
The government this week scrapped the 12% and 28% tax slabs, leaving only two broad rates — 5% and 18%. The new structure will take effect from September 22, 2025, and has been positioned by the Centre as a “Diwali gift” for citizens.
Sitharaman described the exercise of reclassifying items under two slabs as “rigorous yet fascinating.” She said the aim was not just revenue collection but also reducing confusion for consumers.
Giving the example of popcorn — previously taxed at 5%, 12%, or 18% depending on packaging, material, or flavour — she said such inconsistencies highlighted the need for simplification. “The council regrouped items in a way that no confusion remains,” she added. Now, all varieties of popcorn will attract a uniform 5% GST.
"This tax touches lives every citizen so we need to be sensitive that's how proposal came," Sitharaman said.
According to official data, of the 453 goods where GST rates were revised, 413 saw a decrease, while only 40 items became costlier. Nearly 295 goods have been brought down to a 5% or NIL tax bracket from the earlier 12%.
“Today, 99% of all goods and services under GST fall into either the 0%, 5% or 18% slabs. The remaining 1% applies only to demerit or ‘sin’ goods. That shows the extent to which we’ve cleaned up the system—removing anomalies, doubts, duplication, and interpretative issues,” the Finance Minister said.
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