LUCKNOW. In a major move to change India’s economy, Uttar Pradesh Chief Minister Yogi Adityanath announced a big update to the Goods and Services Tax (GST) system. At a press conference in Lucknow, the CM said that the reforms, starting on September 22, 2025, are expected to add around ₹2 lakh crore to the Indian economy.
The CM called these changes a “Diwali gift” from Prime Minister Narendra Modi. The goal is to make the tax structure simpler, give direct support to consumers, and improve key areas like agriculture, healthcare, and manufacturing. These reforms are part of a larger “Next Gen GST” initiative, which aims to streamline the current complex four-tier system into a simpler two-slab model.
A Simplified Structure for a Stronger Economy The main focus of the new GST reforms is to simplify the tax slabs. The existing four-tier structure of 5%, 12%, 18%, and 28% will move to just two main slabs: 5% and 18%. A special 40% rate will stay for specific luxury and “sin” items like tobacco and pan masala. Removing the 12% and 28% slabs will make many goods and services more affordable for everyday citizens.
This simplification should lower the tax burden on consumers and improve business operations for small and medium-sized enterprises (MSMEs). The GST Council’s decision follows extensive consultations and responds directly to public and industry calls for a clearer and more user-friendly tax system.
Direct Relief for Consumers and Farmers
These reforms will directly impact millions of households. Essential consumer goods such as shampoo, toothpaste, soap, milk, curd, cheese, and bicycles will now be taxed at the lower 5% rate or could even be exempt. This change should increase purchasing power, stimulate demand, and encourage spending across the country, particularly in Uttar Pradesh, India’s largest consumer market.
Farmers, who are a vital part of the Indian economy, will also see significant advantages. GST on farming equipment like tractors, tires, pesticides, and irrigation tools has dropped to just 5%. This change will greatly reduce farming costs, improve productivity, and give a major boost to the rural economy.
Boost for Key Industries and Services
Beyond helping consumers, the new GST framework is expected to invigorate several key industries.
Healthcare: The government has completely removed GST on personal life and health insurance, making important health coverage more affordable. Taxes on medicines, oxygen, and testing kits have also been lowered, which will reduce treatment costs for citizens
Automobile Sector: A 10% tax cut on cars and bikes, with the GST rate reduced from 28% to 18%, will make vehicles more accessible for middle-class families. This significant change aims to support the automobile industry, increasing production and creating new jobs
Education: In notable relief for parents and students, GST on notebooks, pencils, and other educational supplies has been entirely eliminated
Uttar Pradesh, with its thriving “One District, One Product” (ODOP) program, is well-positioned to benefit from these reforms. Products like Banarasi sarees, Lucknow’s Chikankari, and Firozabad’s glassware will now bear a lower tax burden, helping local artisans and industries
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