FM says GST rates to be reduced further, rationalised; Congress demands overhaul

Union Finance Minister Nirmala Sitharaman has said that Goods and Services Tax (GST) rates will be reduced further as the process of rationalising tax slabs is nearing completion.

FM Sitharaman mentioned that the revenue neutral rate (RNR), which was 15.8 per cent when GST was introduced in July 2017, has now come down to 11.4 per cent in 2023 and will decrease further.

Speaking at a media event in the national capital, FM Sitharaman said that the work on simplifying GST slabs is almost finished. The GST Council, which is led by the Finance Minister and includes state finance ministers, is expected to take a final decision soon.

“Now, at this stage, there is one more look that I would (take) the groups (GoM) have done excellent work, but I still have taken it upon myself to, once more, completely review each of the groups' works, and then probably take it to the Council to see if we can come to a final conclusion on this,” the Finance Minister stated.

The GoM was set up in September 2021 to suggest changes in GST rates and slabs. This committee consists of finance ministers from six states and has been working on making the tax system more efficient.

The rationalisation process includes reducing the number of tax slabs, streamlining rates, and addressing key concerns raised by different industries.

The Union Minister emphasised that a final review is underway before presenting the proposal at the next GST Council meeting.

“We'll take it to the next council (meeting). We are very close to coming to a final call on some of the very critical issues, reduction, rationalisation of rates, looking at the number of slabs and so on,” FM Sitharaman said.

However, Congress has called for a complete overhaul of the GST system, saying that mere rate reductions are not enough.

Congress leader Jairam Ramesh said that the government must focus on creating a simplified and less punitive GST system instead of just reducing tax rates on select items.

He pointed out that the party had proposed a "GST 2.0" in its 2024 Lok Sabha election manifesto, which aimed to make the tax system truly "Good and Simple."

The Congress, he said, remains committed to this vision.

When asked about stock market volatility, the finance minister attributed it to global uncertainties, including wars, disruptions in the Red Sea, and piracy threats.

FM Sitharaman said that predicting absolute stability in the markets is difficult due to these unpredictable global factors.

On the government’s plans for public sector banks, the Union Minister added that efforts are being made to increase public shareholding.

The goal is to have more retail investors in public sector banks, which will enhance public participation in the banking sector.

Regarding the India-US trade deal, the Finance Minister mentioned that both countries are working towards a mutually beneficial agreement.

FM Sitharaman also highlighted that India is actively engaged in negotiations with the European Union and the UK, ensuring that national interests remain a priority.