India launches 2-slab GST regime PM Modi calls it “festival of savings”

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India is set to witness a major transformation in its taxation system as the new two-slab Goods and Services Tax (GST) regime comes into effect at midnight on Sunday, September 21, 2025. The move is being hailed as a landmark step towards simplifying taxes, lowering consumer costs, and promoting local businesses. Prime Minister Narendra Modi called this rollout a “bachat utsav,” which means a festival of savings, while also linking it to the country’s broader goal of “aatmanirbharta” or economic self-reliance.

In a nationwide televised address, Mr. Modi explained that the new two-slab GST system is a significant improvement over the current four-slab model. By reducing the number of tax brackets, the government aims to make compliance easier for businesses, particularly small and medium enterprises (MSMEs), while also reducing the prices of everyday goods for consumers.

The Prime Minister emphasized that this reform is not merely a tax adjustment but a part of a larger economic strategy. Simplifying GST, according to him, will cut down administrative hurdles, reduce paperwork, and help businesses save both time and money. These savings, he explained, will ultimately benefit consumers as businesses can pass on the reduced costs to buyers in the form of lower prices.

Mr. Modi also linked this reform to the idea of supporting Indian-made products. He urged citizens to consciously prefer locally produced goods over imported ones. This, he said, would boost domestic manufacturing, support MSMEs, and create jobs for millions of people across India. By strengthening small businesses, the government aims to encourage inclusive growth and make India’s economy more resilient.

Understanding the Two-Slab GST System

The new system divides goods and services into two main tax rates. While exact slab rates were not detailed in the address, the idea is to simplify what was previously a complex four-tier system. The simplification is expected to make it easier for businesses to calculate taxes, file returns, and comply with regulations, reducing the chances of mistakes and penalties.

Industry experts have welcomed this move, noting that a simpler GST structure will encourage transparency, attract investments, and improve the ease of doing business in India. Smaller businesses, which often struggle with complex tax filings, are likely to benefit the most. Consumers can also expect a smoother shopping experience, as tax-inclusive pricing becomes simpler to understand.

Broader Economic Implications

Beyond tax simplification, the Prime Minister highlighted the strategic goal of economic self-reliance. “Aatmanirbharta” is a vision where India depends less on imports and more on domestic manufacturing. By promoting locally made products, the government hopes to strengthen supply chains, encourage innovation, and ensure long-term economic growth.

Analysts believe the reform could also boost investor confidence. With a clearer and simpler tax system, domestic and international investors are likely to see India as a more predictable and stable market for business expansion. Additionally, the focus on MSMEs aligns with global trends of supporting small businesses as the backbone of economic growth.

Benefits for Citizens

The rollout of the two-slab GST system is expected to directly benefit ordinary citizens in several ways:

1. Lower Prices: Fewer tax slabs mean simpler pricing structures, reducing confusion and potentially lowering the cost of goods.
2. Easier Compliance: Businesses will have simpler tax calculations, which can reduce administrative costs passed on to customers.
3. Support for Local Products: By encouraging Indians to buy domestic goods, the reform strengthens MSMEs and creates employment opportunities.
4. Boost to Economy: A simpler and more transparent tax system can help India’s economy grow faster, attract investment, and improve financial stability.

PM Modi’s Vision

The Prime Minister framed this reform as a symbolic step towards a larger vision: an India that is self-reliant, economically strong, and globally competitive. By linking GST simplification to the everyday choices of citizens, Mr. Modi emphasized that economic reforms are not just government initiatives—they require active participation from the public.

He urged every Indian to be conscious of their buying choices and support Indian businesses. According to him, when citizens choose local products over imported ones, it strengthens the economy, preserves jobs, and makes the nation more independent in the global market.

The two-slab GST regime is being celebrated as more than just a tax reform; it is seen as a milestone in India’s journey towards economic self-reliance and growth. While the immediate benefits will be felt in lower prices and easier compliance for businesses, the long-term goal is to create a more robust economy powered by local enterprises.

As the midnight rollout approaches, millions of Indian citizens, businesses, and investors are watching closely, hopeful that this reform will deliver on its promises of savings, simplicity, and self-reliance.

GST reform, two-slab GST, PM Modi, India economy