What to Read in The Hindu Editorial( Topic and Syllabus wise)

Editorial 1: ​Cuts in time

Context

By cutting GST rates, the government aims to revive spending at home, offsetting the pressure from sluggish export growth.

Introduction

The recent GST rate cuts, approved in the 56th GST Council meeting, represent a bold step towards stimulating demand and reviving economic momentum. Coming soon after the Prime Minister’s Independence Day address, these reforms signal a renewed push for simplification, lower tax burden, and stronger consumption growth at a time when other economic drivers appear weak.

Positive Impact of GST Reforms

• Recent GST changes approved by the GST Councilhave boosted public sentiment and may stimulate the economy.
• Tax cutsare among the most effective tools to increase demand and optimism.
• The Centre’s pushfor reforms helped the Council clear them quickly.

Timing and Criticism

• Concerns that reforms came “too late” are misplaced.
• As a federal body, the GST Council allowed States to suggest cuts earlier, but none did.
• The Prime Minister’s announcementbefore formal discussions raised questions, but:
  • The Council endorsed decisions on the first dayof its two-day meeting.
  • This reflected strong consensus among the States.
• The minutes of the 56th meetingwill clarify the individual positions of members.

Scope of Rate Changes

• Broad coverage: Most sectors saw reductions in tax rates.
• Exceptions: Only a few items, such as luxury motorcycles and high-priced apparel, became costlier.
• The 40% tax bracketwas kept narrow, avoiding overburdening it with new items.
• Together with the income tax cuts in Budget 2025, these changes should:
  • Strengthen consumption demand.
  • Compensate for weak exportsand private investment.

Fiscal Implications

• Government estimates ₹48,000 crore annual revenue loss, based on 2023-24 consumption.
• Actual loss may be higher given the scale of cuts.
• Compensation cesswas abolished despite demands from Opposition States.
  • Keeping the cess would have weakened simplification efforts.
  • States must now rely on their own revenuesand the 16th Finance Commission for support.

Structural Improvements

• GST 2.0is still somewhat complex, but notable improvements include:
  • Removal of duty inversions.
  • Simplification of paperwork.
• To ensure benefits reach consumers, the government should:
  • Revive the National Anti-Profiteering Authority (NAA)
  • Monitor price pass-through once changes take effect on September 22.

Conclusion

The new GST 2.0, despite lingering anomalies, reflects a strong commitment to rationalisation and ease of compliance. By reducing duty inversions, abolishing the compensation cess, and aligning with income-tax cuts, it offers a timely boost to public confidence and the economy. Ensuring that benefits are passed on to consumers will be the real test of these reforms.

 

Editorial 2: GST 2.0 is a landmark in India’s tax journey

Context

The move to simplify multiple GST slabs reflects a reform designed for the people.

Introduction

The 56th GST Council meeting, held on September 3, 2025, stands out as a defining moment in India’s tax history. The reforms introduced extend well beyond mere changes in rates or structures; they embody a decisive shift toward a simpler, fairer, and growth-oriented system. By aligning taxation with the broader vision of Viksit Bharat 2047, these measures signal a bold commitment to building a modern, inclusive, and future-ready economy.

Simplification of GST Structure

• Long-standing Demand
  • Both industry and consumershave called for simplification of the multiple GST slabs (5%, 12%, 18%, 28%).
• Introduction of “Simple Tax”
  • Transition to just two main rates:
    • 18% Standard Rate.
    • 5% Merit Rate(for essentials).
  • Retention of a 40% de-merit ratefor select goods (luxury or harmful items).
• Transformational Impact
  • Reduces compliance burdensfor businesses.
  • Enhances predictability and transparencyin taxation.
  • Makes GST more citizen-friendlyand easier to understand.
• Global Alignment
  • Signals the government’s commitment to global best practicesin taxation.
  • Positions India as a country with a simpler, more efficient tax regime.

Relief for a range of income groups

• Household Essentials
  • Soap, shampoo, toothpaste, bicycles, and kitchenware now in 5% GST bracket.
  • Essentials like UHT milk, paneer, chapati, and parathaare exempt.
  • Packaged foods, noodles, chocolates, and beverages see rate cuts, boosting consumption and easing family budgets.
• Insurance & Social Security
  • All life and health insurance products exempt from GST.
  • Makes insurance more affordable, especially for senior citizensand low-income families.
  • Strengthens social securityand increases insurance penetration.
• Healthcare Access
  • Exemptions/reductions on essential drugs, medical devices, and treatmentsfor cancer, rare diseases, and chronic conditions.
  • Expands access to modern medicine and diagnostics.
  • Reduces financial burdenon households.
• Farm Sector Benefits
  • Tractors, farm machinery, and implementstaxed at just 5%.
  • Fertilizers and inputs(sulphuric acid, ammonia) moved from 18% to 5%.
  • Corrects inverted duties, reducing cultivation costsand improving farm productivity.
• Labour-Intensive Sectors
  • Reduced rates for handicrafts, marble, granite, and leather goods.
  • Stimulates domestic demandand secures employment.
  • Makes traditional industries more competitive, safeguarding livelihoods and opening new growth avenues.

Changes in critical sectors

• A major achievement is the removal of inverted duty structuresin key sectors.
• Example: GST on man-made fibre and yarn cut to 5%, resolving long-standing distortions in the textile value chain.
• Expected outcomes:
  • Greater competitiveness.
  • Growth in exports.
  • Increased domestic value addition.
  • More job creationin textiles and apparel.

Rate Rationalisation in Core Sectors

• Cement GST reduced from 28% to 18%, supporting housing and infrastructure with strong multiplier effects.
• GST cuts for renewable energy devicesand auto components to accelerate India’s green growth journey.
• The CII’s long-standing recommendations—including rationalisation of auto parts and relief for hospitality and wellness—have been accepted.
• These changes will harmonise marketsand minimise disputes.

Institutional Strengthening

• Goods and Services Tax Appellate Tribunal (GSTAT)to be operational by year-end.
• Benefits for taxpayers:
  • Faster dispute resolution.
  • Consistent rulings.
  • Enhanced trust in the system.
• Additional process reforms include:
  • Provisional refundsfor inverted duty cases.
  • Risk-based compliance checks.
  • Harmonisation of valuation rules.
• Collectively, these reduce uncertaintyand compliance costs, reinforcing India’s reputation as a top business destination.

Industry Partnership and Advocacy

• Over the past eight months, CII has pushed for:
  • A two-rate GST structure.
  • Removal of anomalies.
  • Lower taxes on essentials.
  • Support for labour-intensive sectors.
  • Faster implementation of GSTAT.
• Many of these proposals have now been adopted, showing the Council’s responsivenessand partnership with industry.
• This marks a proud milestonefor stakeholders who contributed constructively to the reform process.

Conclusion

Equally significant is the phased rollout of reforms from September 22, 2025, which balances revenue stability with the immediate benefits of lower tax rates for industry and consumers. This approach not only protects fiscal health but also fuels demand and investment. The announcements go beyond technical adjustments—they represent a people-centric reform that touches citizens, farmers, workers, businesses, and entrepreneurs alike. By simplifying the tax structure, reducing rates on essentials, correcting past distortions, and strengthening institutions, GST 2.0 lays a stronger foundation for India’s growth journey. The CII has pledged its support to ensure smooth implementation, wider awareness, and the seamless flow of benefits to every section of society.