Over recent years, the government has implemented significant reforms, eliminating over 40,000 unnecessary compliances and repealing more than 1,500 outdated laws to establish a modern and citizen-friendly ecosystem. One of these reforms was the GST rate rationalisation, initiated on September 22 this year, as part of efforts to build a more advanced India.
On the 79th Independence Day, Prime Minister Narendra Modi announced plans for next-generation GST reforms to be introduced by Diwali, aimed at reducing taxes on everyday items. These reforms are intended to lessen the tax burden on the common man and stimulate economic activity, providing a Diwali gift for the citizens.
The Finance Ministry reports that the rollout of GST 2.0 has begun to positively impact India’s economy, leading to increased consumption trends, higher sales in key sectors like automobiles, and enhanced consumer sentiment.
The passenger vehicle industry has experienced significant year-on-year growth in wholesale and retail volumes in November, driven by sustained post-festive demand, recent GST rate reductions, and the winter wedding season. Retail sales surged by 22% year-on-year, while wholesale volumes increased by 19% to 4.1 lakh units, with OEMs maintaining production to meet demand.
The revision in GST rates has resulted in a 5% growth in state revenues (Gross SGST+IGST settled to States) from September to November of the current financial year compared to the same period in the previous year.
During the Winter Session, Minister of State for Finance Pankaj Chaudhary stated in a written reply to the Rajya Sabha that GST collections from September to November of the current financial year (2025-26) increased to Rs 2,59,202 crore from Rs 2,46,197 crore in the same period of 2024-25.
The recent GST rate rationalisation and the government’s focus on improving the ease of doing business are part of a multi-pronged strategy to boost consumption growth in the economy, which is expected to have a positive impact on GST revenue.
The rate rationalisation has stimulated the retail credit market, with an increase in affordability reflected by a rise in the Credit Market Indicator (CMI) to 99 in Q2 FY25 from 98 in the previous quarter. The heightened demand for retail loans signals renewed consumer confidence and market optimism, according to a report from TransUnion CIBIL.
Various high-frequency indicators suggest that India’s economic activity has gained momentum following the GST reforms, with E-way bill generation expanding by 14.4% in September and October 2025 year-on-year. Additionally, cumulative GST collection growth of 9% for April–October 2025 indicates a resilient revenue stream, supported by strong consumption and improved compliance, as per government data.
Finance Minister Nirmala Sitharaman has highlighted that after income tax and GST reforms, the government’s next focus is on simplifying the customs tax system.
