President Droupadi Murmu announced that the Union government is committed to making significant changes that will positively impact the lives of poor and middle-class citizens. These changes include new tax reforms that aim to make the tax system fairer and more efficient, helping to ensure that more people benefit from government policies.
The President, addressing both Houses of Parliament, stated that the historic GST 2.0 reform, introduced in September 2025, has resulted in savings of approximately Rs 1 lakh crore for citizens and has enhanced consumption and economic momentum.
Income Up to INR 12 Lakh is Tax-Free Under the New Tax Regime
An effective decision has been made by the government to waive off the income up to Rs 12 lakh from income tax, delivering relief to middle-class families. President Murmu cited. Also, she said that the new and simplified Income Tax Act, 2025, has already been legislated and will come into effect from April 1, 2026.
In the Union Budget 2025-26, presented on February 1 last year, the enhanced exemption limit was declared, raising the threshold to Rs 12 lakh from 7 lakh under the revised tax framework.
“These reforms are providing unprecedented benefits to poor and middle-class families and have given a new impetus to the country’s economy,” Murmu said.
GST 2.0 and Its Two-Tier Structure
The President Speaking on the GST 2.0 reform, mentioned that the next-generation overhaul has filled citizens with enthusiasm by streamlining tax rates and lowering the burden on essential goods.
Effective September 22, 2025, the GST will adopt a two-tier structure, where most goods and services will be taxed at either 5% or 18%. On ultra-luxury goods and products, a 40% GST rate will continue to apply.
As part of the reform:
99% of goods earlier under the 12% slab were transferred to the 5% slab
90% of items under the 28% slab were moved to the 18% slab
The earlier four-slab GST structure (5%, 12%, 18%, 28%), which also included a compensation cess on luxury and sin goods rolled out at GST’s launch on July 1, 2017, has been substituted under the same rationalisation.
Lower GST Rates Fuel Higher Market Consumption
President Murmu whole stressing the impact of the GST rate reductions, mentioned that two-wheeler registrations have exceeded 2 crore units in 2025, thus marking a new record, showing enhanced affordability and consumer demand after the tax reductions.
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“Old rules and provisions are being continuously updated in line with future needs,” she said, reiterating the government’s commitment to reform-led growth.