99% of goods in 12% GST bracket moved to 5%, says Sitharaman

Union Finance Minister Nirmala Sitharaman, on Sunday (September 14, 2025), said the GST regime has benefited both the people and the State governments.

Addressing the joint conclave of Trade and Industries Association in Chennai on the topic ‘Tax Reforms for Rising Bharat’, she said in the latest GST reforms, 99% of all the goods which were in the 12% GST bracket have now come under the 5% GST bracket.

“This is a reform which touches the lives of all 140 crore people. The GST rate cuts in the range of 10-13% will reduce the expenses for people and they can use that extra savings elsewhere,” Ms. Sitharaman said.

She also expressed confidence that the companies would pass on the benefits of rate cuts to the consumers. “When the GST was introduced in 2017, there were 65 lakh taxpayers. Today there are 1.51 crore taxpayers,” she added.

“The gross GST receipts which were ₹7.19 lakh crore in 2017 has now touched ₹22 lakh crore. On average, per month GST collection is ₹1.9 lakh crore or ₹2 lakh crore for Central and State governments which is divided in the ratio of 50:50,” Ms. Sitharaman said.

“If the monthly GST collection is ₹1.8 lakh crore, ₹90,000 crore goes to the States and ₹90,000 crore comes to the Centre. Out of the Centre’s ₹90,000 crore, 41% goes to the States,” she added.

Ms. Sitharaman noted that almost eight months of work went into GST 2.0 reforms and the rate rationalisation was effected with cooperation from Finance Ministers of all States in the GST Council. “GST rates for over 350 items have been reduced,” she noted.

“Systems have been simplified so that GST registration can be done in three days,” Ms. Sitharaman said. “Another major step is addressing the product classification problems in GST 2.0,” she said.

“There were different Court rulings on GST rates from different States,” she mentioned.

“Now we have brought all food items at 5% or 0%. So there is no classification problem. We have brought similar classification for one type of goods. We worked on it for eight months looking into each item and what category it should be classified,” Ms. Sitharaman said.

She also pointed out that the cut in personal income tax rates, the new Income Tax Act and the GST reforms have all been done in a span of eight months. The GST refunds have also been simplified, Ms. Sitharaman said.

“The GST reforms was a policy driven exercise. We did it keeping in mind five major points — whether there will be changes in daily use items, whether we are bringing changes in the daily use items used by poor and middle class, whether it would be helpful for the farmers, whether the raw material cost for MSMEs would come down and finally whether it will benefit the sectors which will boost the economy,” she said.

Speaking at the event, A.R. Unnikrishnan, Chairman of CII Tamil Nadu State Council and G.S.K. Velu, Chairman, Federation Of Indian Chambers Of Commerce and Industry (FICCI) and Tamil Nadu State Council among other industrialists welcomed the GST reforms.

Linesh Sanatkumar, President, Hindustan Chamber of Commerce said the increase in GST rate of paper and paperboard to 18% from 12% has come as a major shock to the entire fraternity.

He also sought for rationalisation of GST on coastal shipping and inland water transport (IWT) which are recognized as the key driver for reducing logistics cost in India and other measures.

Tamil Nadu Traders Association President A.M. Vikramaraja flagged the issue of harassment of traders by some GST officials and sought formation of a committee to address the issue. He also sought a scheme to enable traders to settle past GST dues.