In her address to both Houses of Parliament, Hon’ble President of India Ms Droupadi Murmu articulated the Government’s reform narrative as one of continuity, scale, and structural intent. Characterising the current policy trajectory as the “Reforms Express”, the President highlighted two transformative pillars: the rollout of GST 2.0 and the overhaul of the Income-tax framework, both of which, according to the Government, are reshaping the tax burden, consumption patterns, and industrial competitiveness.
From a fiscal law perspective, the address is significant not for rhetorical emphasis, but for the quantified outcomes and systemic direction it signals.
GST 2.0 as a Structural, Not Incremental, Reform
The President underscored that the next-generation GST reform (GST 2.0), implemented from September 22, 2025, has resulted in aggregate savings of approximately ₹1 trillion for citizens. This assertion reflects a fundamental recalibration of the GST rate architecture rather than piecemeal rationalisation.
Shift to a Two-Tier GST Structure
GST 2.0 replaced the earlier four-slab framework (5%, 12%, 18%, 28% plus cess) with a simplified two-tier rate system:
- 5% and 18% for the vast majority of goods and services, and
- 40% for ultra-luxury items, tobacco, and related demerit goods.
Approximately 99% of goods earlier taxed at 12% were shifted to the 5% slab, while around 90% of items from the 28% slab were brought down to 18%. From a tax-design standpoint, this marks a decisive move toward rate compression and consumption neutrality, long advocated by GST reform committees.
Consumption, Compliance, and Economic Signals
The President linked GST 2.0 outcomes with tangible market indicators, noting that two-wheeler registrations crossed two crore units in 2025, a development attributed to reduced indirect tax incidence. This linkage is important: it positions GST not merely as a revenue instrument, but as a demand-side policy lever influencing affordability and consumer behaviour.
From a compliance perspective, fewer slabs also reduce classification disputes and litigation, addressing one of GST’s most persistent fault lines.
Income-Tax Reform: Redefining the Tax Base
Alongside GST 2.0, the President highlighted what was described as a historic income-tax reform, namely:
- exemption of income up to ₹12 lakh, and
- enactment of the Income Tax Act, 2025, scheduled to take effect from April 1, 2026.
This reform signals a strategic narrowing of the personal income-tax base, coupled with simplification of statutory language and structure. From a fiscal jurisprudence perspective, it reflects a shift toward voluntary compliance, reduced litigation, and administrative efficiency, rather than expansion of the taxpayer net through coercive thresholds.
Manufacturing, Electronics and GST Linkages
The address placed GST reform within a broader industrial policy narrative. The President noted that:
- electronics production has increased six-fold over the past decade,
- total electronics output has reached ₹11 trillion, and
- smartphone exports crossed ₹1 trillion in the first five months of FY 2026-27.
GST rate rationalisation, particularly on electronics and consumer goods, has played a non-trivial role in strengthening domestic value chains and export competitiveness by reducing tax cascading and embedded costs.
Semiconductor and Technology Self-Reliance
A notable policy signal in the address was the emphasis on microchip manufacturing as a strategic priority. Approval of four semiconductor units in 2025, with ten more expected to commence operations in coming years, situates tax reform within a long-term framework of technology sovereignty and supply-chain resilience.
Indirect tax stability and predictability are critical inputs for capital-intensive sectors such as semiconductors, making GST 2.0 relevant beyond consumer markets.
Startups, Digital Infrastructure, and Reform Synergy
The President also highlighted India’s emergence as the third-largest startup ecosystem globally, with nearly two lakh registered startups and significant participation by women directors. Expansion of 4G and 5G infrastructure, along with Digital India initiatives, was presented as complementary to tax reforms, together lowering entry barriers and transaction costs.
Conclusion
President Murmu’s address frames GST 2.0 and allied tax reforms as structural enablers rather than isolated fiscal measures. The emphasis on rate simplification, reduced tax burden on mass consumption, and legal overhaul of income-tax law indicates a calibrated shift toward predictability, affordability, and growth-oriented taxation.
From a tax-law standpoint, the real test of the “Reforms Express” will lie in administrative execution, dispute reduction, and long-term revenue buoyancy, rather than headline savings alone. Nevertheless, the policy direction articulated marks a clear departure from incrementalism toward systemic reform.
Source: Business Standard