GST Rationalisation Took 18 Months: Nirmala Sitharaman
Sitharaman also said that the GST framework overhaul took time to work out a ‘worthy pack’ (of proposals) to present to the Prime Minister.
New Delhi: Recalling the next-generation GST reforms in the country, Union finance minister Nirmala Sitharaman on Tuesday said the reduction and rationalisation of GST slabs — from four to two, and exempting certain items, including premiums for health and life insurance — were 18 months in the making. “This was in the making for over one and a half years. When the major announcements on income tax happened during the budget, the Prime Minister Narendra Modi reminded me about GST reforms,” she said while speaking at an NDTV summit.
Sitharaman also said that the GST framework overhaul took time to work out a ‘worthy pack’ (of proposals) to present to the Prime Minister. “That time was in May, when GST revision rumours surfaced. But there was no particular acrimony between the federal government and state counterparts, especially those not ruled by the BJP on this topic, she said, adding “to be fair to state finance ministers, they were all on board with rate rationalisation.”
The finance minister also underlined what Modi said about the timing of the GST news — which came days after the US President Donald Trump’s 50 per cent tariff came into effect. “There is no connection between the GST overhaul and the US tariff. It was not as if the crisis was on us because of US tariff measures, but it was in May, when she realised there was a worthy package to present to the PM,” she said.
On the support of her state counterparts on GST reforms, Sitharaman also said that after the 56th GST Council meeting, she did the first thing to thank every finance minister across states. “The meeting was not at all acrimonious, but there were multiple rounds of views being presented. All ministers told us that they were in favour of rate rationalisation, the differences came when states started speaking about what if their revenues go down,” she said.
When asked about the states complaining of missing out on compensation, Sitharaman further said that there has been no compensation since 2022. “The compensation cess being collected right now will go into repaying the loans availed during Covid. Better collection efficiency improves overall collections, not as if the Centre is sitting with a huge suitcase to pay,” she said.
On the domestic exporters’ concern due to the US tariff blow, the finance minister also said that the US tariff hit those exporters who export to many other countries. “While I am not undermining the impact of a 50 per cent tariff imposed by the US administration, it also hits exporters who are exposed to the US,” she said.
