Sitharaman thanks state FMs for support in implementing GST overhaul

Finance Minister Nirmala Sitharaman hailed the GST Council's unanimous decision to cut tax rates, thanking state finance ministers for prioritising public relief over revenue concerns

Union Finance Minister Nirmala Sitharaman has written to finance ministers of all states, thanking them for their support in approving a major overhaul of the Goods and Services Tax (GST) structure, PTI reported on Saturday.

 

The GST Council, chaired by Sitharaman and comprising representatives of all states and Union Territories, met on September 3 and approved a comprehensive overhaul of tax rates after a daylong discussion. The changes, effective September 22, will reduce rates on a wide range of products from butter, chocolates and shampoos to tractors and air conditioners, and remove them altogether for some household essentials.

 

“Yesterday, I have written a letter to each finance minister thanking them, saying, you can have any number of intense discussions and arguments, but finally, the Council rose to the occasion and gave relief to the people of India. And, I am grateful for that gesture,” Sitharaman told PTI.

 

Council prioritised relief over revenue concerns 

She described the Council’s work as “remarkable” as members set aside worries about revenue losses to take a unanimous decision. The new structure merges the 12 per cent and 28 per cent tax slabs into two main categories: 5 per cent for common-use goods and 18 per cent for the rest.

 

Sitharaman said states were supportive of lowering rates but worried about the fiscal impact. “I even appealed to them, saying, for the sake of the people of India, please. It’s not just the states. It’s even the Centre that is going to get affected by the reduction. But we’ll make up for it because once the rates come down, people are going to come out to buy, and that will take care of it. That’s how consensus was arrived at,” she said. 

 

Inclusive deliberations credited for consensus 

At a press conference after the meeting, Sitharaman praised the inclusive nature of the discussions. “All points were thoroughly deliberated before arriving at a consensus,” she said.

 

She added that every minister’s views were heard patiently, and even those who wanted to speak again after their initial points were allowed to do so. “Their additional inputs were heard and taken into account,” she said, crediting states for constructive participation in one of India’s biggest tax reforms.

 

Concerns raised by Opposition states 

Opposition-ruled states have voiced two main concerns: compensation for GST revenue losses and ensuring that the benefits of lower rates are passed on to the public.

 

The Congress has described the rejig as “GST 1.5” and said time will tell whether it stimulates private investment and eases the burden on micro, small and medium enterprises (MSMEs). The party asserted that the wait for a “true GST 2.0” continues.

 

“Eight Opposition-ruled states — Karnataka, Himachal Pradesh, Jharkhand, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal — have extended their support to the reduction in the number of GST rate slabs and a reduction in the rates themselves for items of mass consumption,” Congress leader Jairam Ramesh said on X.

 

He added that these states have also called for a mechanism to ensure that the benefits of the rate cuts reach consumers.