GST Reforms: How the Modi Government is Lightening Everyday Burdens for Indians

Since its introduction in 2017, the Goods and Services Tax (GST) has been one of India’s most ambitious economic reforms. Marketed as “One Nation, One Tax,” it replaced a complicated web of central and state levies with a unified indirect taxation system. While the initial years saw businesses, states, and consumers grappling with compliance issues and rate disputes, the Narendra Modi government has consistently pushed for reforms to make GST simpler, fairer, and more consumer-friendly. Recent changes, particularly under the framework often referred to as GST 2.0, underline this intent by reducing the tax burden on common households, rationalising rates, and streamlining processes.

This article explores how the Modi government is easing everyday burdens for Indians through GST reforms, their implications for households and businesses, and the challenges that remain.

---

The Philosophy Behind GST Reforms

At its core, GST was meant to reduce the cascading effect of multiple taxes, increase transparency, and improve compliance through digital integration. However, over the years, concerns grew that the system had become too complex, especially with multiple rate slabs ranging from 0% to 28%, compliance-heavy filing structures, and uneven benefits across sectors.

Recognising these issues, the Modi government has pursued a twin approach:

1. Rationalising tax rates to make essential goods and services more affordable.
2. Simplifying compliance through technology-driven solutions like e-invoicing, single returns, and automated credits.

The overarching goal is not only to boost economic growth but also to make everyday living cheaper for the common Indian household.

---

Lower GST on Essential Goods and Services

One of the biggest criticisms of GST was that many essential goods used by the middle and lower-income classes were taxed at higher slabs. Over time, the GST Council, under the government’s guidance, has slashed rates on multiple categories:

• Household appliances like washing machines, refrigerators, and TVs saw their GST rates cut from 28% to 18%. This has made durable goods more accessible for middle-class families.
• Mobiles and laptops, critical for education and work-from-home during the pandemic era, witnessed rationalisation of rates.
• Food items such as frozen vegetables, packed cereals, and dairy products are either exempt or taxed minimally, helping families manage rising food inflation.
• Medicines and health equipment, particularly during COVID-19, were moved into lower slabs, ensuring accessibility during a national crisis.

By reducing GST on these goods, the government has directly impacted the cost of living, putting more money back into the hands of consumers.

---

Relief for Services Used by Everyday Indians

It’s not just goods—services that touch the daily lives of citizens have also been rationalised. For instance:

• Cinema tickets, once taxed at 28%, now attract only 12% or 18%, depending on ticket price, making entertainment more affordable.
• Public transport services like metro and buses remain exempt, supporting affordable mobility for millions.
• Housing sector benefits under GST reforms ensure that affordable housing projects face only a 1% GST rate, directly benefiting first-time homebuyers.

Such measures illustrate how the reforms are tailored not just to boost business but to make life easier for the average Indian.

---

Technology-Driven Simplification

Another area where the Modi government has sought to lighten burdens is compliance. Before GST reforms, businesses, especially small ones, complained of multiple monthly returns, complex input tax credit rules, and delays in refunds. Recent changes aim to simplify:

• Single return system: Instead of filing multiple returns, taxpayers now submit a consolidated monthly or quarterly return, reducing compliance costs.
• E-invoicing and automation: These ensure faster reconciliation of input credits and reduce fraud. Small businesses with turnover below a threshold have been given relaxations.
• Faster refunds: Exporters and MSMEs now receive quicker refunds, easing their working capital pressures.

These steps directly support small traders and businesses, ensuring they are not bogged down by red tape. Since SMEs form the backbone of employment in India, these reforms indirectly benefit households by safeguarding jobs.

---

Impact on State Revenues and Federal Balance

One challenge of GST rationalisation has been balancing consumer relief with state finances. Lower rates mean lower revenues, and states have often resisted cuts fearing a dent in their fiscal health. To address this, the central government provides compensation cess and shares integrated GST revenues.

Critics argue that constant rate cuts may weaken state coffers. However, the government’s stance is that a lighter tax burden boosts consumption, which in turn expands the tax base. For households, this means lower upfront costs on goods and services, while for the government, it is a long-term bet on higher economic growth.

---

Boosting Consumption and Middle-Class Confidence

The cumulative impact of GST reforms has been to boost consumption, particularly among middle and lower-income households. Lower taxes on daily-use goods, appliances, housing, and transport give families more disposable income. In turn, this encourages spending, which strengthens the economy.

For example:

• A family buying a refrigerator now pays 10% less tax than before GST cuts.
• A middle-class couple booking tickets to a movie saves on entertainment expenses.
• Students purchasing laptops for online classes benefit from rationalised GST rates.

These are not headline-making numbers individually, but collectively, they ease the financial strain on households.

---

Challenges That Remain

Despite the progress, several challenges persist in making GST truly seamless:

1. Multiple slabs – India still has four main GST slabs (5%, 12%, 18%, and 28%), which creates complexity. Economists advocate moving towards a three-tier or dual-rate system.
2. Petroleum and electricity exclusion – Key sectors like fuel and electricity are outside GST, leading to price distortions and burden on consumers.
3. State-Centre tussles – The federal structure sometimes delays reforms, with states resisting cuts that affect their revenues.
4. Compliance for small traders – While technology has helped, many micro-businesses in rural areas still struggle with digital filing.

The Modi government acknowledges these hurdles, and the push for GST 2.0 is expected to address them gradually.

---

The Road Ahead

As India marches towards becoming a $5 trillion economy, GST reforms will play a pivotal role. The Modi government’s vision is to evolve GST into a simpler, two-slab system, include petroleum and electricity under its ambit, and further digitise processes.

For everyday Indians, this means:

• Lower costs of essential goods through rational tax slabs.
• Affordable services like housing, healthcare, and education.
• Simpler processes for small traders and entrepreneurs, ensuring employment stability.

Ultimately, the reforms are about creating a tax system that not only collects revenue but also empowers citizens by reducing the cost of living and boosting confidence in India’s economic future.

---

The Modi government’s GST reforms represent more than just tax tweaks—they signal a commitment to easing the financial burdens of everyday Indians. From slashing rates on essential goods and services to simplifying compliance for small businesses, these reforms directly touch household budgets and indirectly strengthen the broader economy.

While challenges like slab rationalisation and state resistance remain, the trajectory is clear: a more consumer-friendly, business-supportive GST system. As reforms deepen, Indians can expect an indirect tax regime that not only fuels growth but also lightens the everyday burdens of millions of families across the country.