‘Easier to ship to Europe than to another state’: Modi recalls pre-GST chaos as GST 2.0 kicks in tomorrow

PM Modi says GST ended India’s broken tax regime where consumers and the poor paid the price of fragmented trade.

Prime Minister Narendra Modi used a striking anecdote to illustrate how broken India’s tax system was before the Goods and Services Tax (GST) was introduced.

“When I became Prime Minister in 2014, a foreign publication had published an article on problems related to intra-country trade. It was easier to send goods to Europe and get them re-imported than to send goods from one state to another,” Modi said.

Consumers and the poor bore the brunt

The Prime Minister said India’s old tax regime was a web of cascading levies that ultimately burdened ordinary citizens. “The poor paid for these systems, and consumers were forced to carry the cost of multiple taxes,” he remarked.

By recalling the inefficiencies of the past, Modi positioned GST as a historic correction that unified India’s fragmented market.

Modi also added that his government made GST a priority from its first term. He noted that consensus-building with states and all stakeholders was crucial to implement what became the country’s most significant tax reform in decades.

GST 2.0 and the road ahead

From September 22, the government is rolling out Next-Generation GST reforms, which Modi dubbed the 'GST Bachat Utsav'. The revamped regime will lower rates on most essential goods, simplify compliance for businesses, and create a two-rate structure of 5 percent and 18 percent.

According to the Prime Minister, the reforms will deliver:

Lower costs for consumers.
Cheaper travel and hotel stays.
Relief for the middle and neo-middle classes through lower tax burdens.
A more attractive environment for investment and manufacturing.

“GST has resolved issues raised by states and stakeholders. Reform is a continuous process, and we need next-generation reforms that reflect the needs of a growing nation,” he said.