New Delhi: Union Minister Ashwini Vaishnaw on Saturday said that the income tax relief announced in the 2025-26 Budget, along with sweeping GST rate cuts, will significantly accelerate India’s economic growth. Addressing a press conference at the BJP headquarters, he described the reforms as “next-generation” measures aimed at simplifying taxation and easing the burden on households.
“Before 2014, the taxation system was extremely complex, with goods taxed at multiple levels. GST has changed that, and this rationalisation will make people’s lives simpler,” Vaishnaw said. He noted that the reduction in GST rates across daily-use items fulfills Prime Minister Narendra Modi’s promise made from the Red Fort.
The revised GST rates will take effect from September 22, the first day of Navratri. Finance Minister Nirmala Sitharaman had announced the changes after the GST Council’s approval, describing them as a “Diwali gift” to the nation.
Under the new structure, essential products such as hair oil, shampoo, toothpaste, soaps, and shaving cream will now fall under the 5 percent slab instead of 18 percent. Dairy products like butter, ghee, cheese, and packaged namkeens will also attract just 5 percent GST, down from 12 percent. Baby care products, utensils, and sewing machines have seen similar cuts.
The agriculture sector, a key driver of the rural economy, stands to gain from reduced tax rates on tractors and their parts, which have been brought down to 5 percent. In healthcare, individual health and life insurance policies are now fully exempt from GST, while medical equipment such as thermometers, oxygen, and diagnostic kits will be taxed at just 5 percent.
Students and parents will also benefit, with education tools like maps, globes, crayons, and pastels being exempted from GST. Notebooks and exercise books have moved to the nil tax category.
The automobile sector, one of India’s largest industries, has received substantial relief. Small petrol, diesel, hybrid, LPG, and CNG vehicles will now face 18 percent GST instead of 28 percent. Three-wheelers, motorcycles up to 350 cc, and transport vehicles have also been moved to the lower slab.
Electronic appliances such as air conditioners, large televisions, projectors, and dishwashers, long taxed at the highest rate, will now be taxed at 18 percent.
Vaishnaw explained that the reforms will have a multiplier effect on consumption and growth. “Our GDP stands at ₹3.30 lakh crore, with consumption at ₹2.02 lakh crore. A 10 percent rise in consumption could add another ₹20 lakh crore, directly boosting GDP,” he said.
The GST Council has also introduced process reforms, including automatic registration for applicants within three working days using data-driven analysis.
The government has positioned these reforms as a cornerstone of its economic strategy, with the dual aim of lowering the tax burden on citizens and creating a virtuous cycle of growth through higher consumption.
