From middle class focus to tax sops to fine print: 5 things that make GST 2.0 a mini Budget for consumers

In a rare 10 pm press briefing on Thursday, September 3, Finance Minister Nirmala Sitharaman unveiled major tax changes impacting the public at large. The late-night announcements immediately set off interpretation across consumers, corporates, policymakers, and experts.

First things first, here’s some food for thought.

What comes to mind when you think of the Union Budget?

• Tax system simplification: A list of items and market buzz about what becomes cheaper or dearer
• Stimulating demand: A focus on measures to boost domestic consumption 
• Benefits for citizens and small businesses: Generally, there's some good news for the common man and for the corporates

Now, what do you think when you think of the latest GST tax cuts?

According to Singhvi, the PM’s promised "Diwali gift" reforms will boost consumption and aid economic growth in the long run. He called GST 2.0 the biggest reform since the corporate tax cut to an effective 25 per cent in 2019, adding that the estimated revenue loss will be offset by stronger consumption over time.

Just like the Budget, these reforms have widespread implications for crores of consumers and ripple effects across the economy.

Here are five basic similarities between GST 2.0 and the Union Budget -- at least its ‘tax proposals’ part:

Policy simplification and rationalisation

The 56th GST Council meeting simplified the rate structure from four slabs (5, 12, 18, 28 per cent) to two main slabs -- 5 per cent (essentials) and 18 per cent (most goods and services) -- with a separate 40 per cent slab for luxury and sin goods.

Similar rationalisation efforts have been a Budget hallmark, whether in income tax slabs, corporate tax reductions, or customs duty simplification.

Focus on consumption and growth

GST 2.0 cuts taxes on hundreds of products across six categories, at an estimated cost of Rs 48,000 crore. Experts believe rising consumption will more than compensate for this.

Budgets too often stimulate demand -- from tax rebates on housing and automobiles to post-pandemic stimulus packages.

Spotlight on the common man, farmers, and small businesses

The reforms ease compliance for MSMEs, cut taxes on daily-use essentials, exempt life and health insurance, and slash levies on small cars, white goods, and farm equipment like tractors and fertilisers.

This echoes past Budgets that prioritised farmer welfare, MSME support, and relief for middle-class households.

Transparency and process simplification

The GST 2.0 reform introduces pre-filled returns and quicker refunds to enhance transparency and reduce litigation.

This has been a common feature in the Union Budgets in the past, with measures such as linking PAN with Aadhaar, enhancing TDS and e-invoicing norms.

Structural and sustainable reforms

Both GST 2.0 and Budgets, in general, stress long-term structural reforms, medium- and long-terms alike -- GST 2.0 with corrected inverted duties and rate rationalisation, and Budget focusing on infrastructure, investment incentives and job creation.

Both events reflect the government’s shift towards resilient and equitable growth, in tandem with its broader 'Atmanirbhar Bharat' (self-reliant India) and 'Viksit Bharat @ 2047' (Developed India @ 2047) ambitions.