New Delhi: Prime Minister Narendra Modi has unveiled sweeping tax reforms to shield India’s economy from US tariff pressures and stimulate domestic demand. The government will simplify the Goods and Services Tax (GST) structure into two slabs—5% and 18%—from October, slashing rates on essentials, electronics, and even small cars, which will now fall from 28% to 18%. The move sparked a market rally, with the Nifty 50 surging 1.36% and the Sensex climbing 1.23%, while the rupee strengthened to 87.35 per dollar. Analysts say the reforms, combined with earlier income tax cuts, could inject up to 0.8% of GDP directly into households, energizing consumption even as India faces trade tensions with Washington. Though the changes may weigh on government revenues, they are widely seen as a political and economic masterstroke, boosting Modi’s standing ahead of crucial elections.
