FM: Many States Are Highly Cautious About Reducing GST Slab Rates

As per the discussion about the rate rationalization by the GST council, FM Nirmala Sitharaman mentioned that the states were cautious about moving ahead with rate cuts. 

“I am not blaming them…they want revenue without burdening the people…when they sit there, they know their job is not to please anyone but protect revenue,” she said.

In between the discussions, the comments arrived at reworking the rates on the goods and services, which FM pointed out would take some time. It is expected to address the debate from the GST council in the forthcoming 54th meeting on Sept 9. 

In recent months the Centre has faced criticism for high GST rates, however, the Finance minister countered it, stating that for almost all goods and services the rates were lower than in July 2017, when the new regime started in post subsuming distinct taxes and cesses.

“There are a lot of vicious, false campaigns on social media. I won’t get into that… the entire country is benefiting from GST,” she expressed, describing that beyond rates, border checks have been terminated making goods movement smoother and faster.

Read Also: FM Thinks to Review an 18% GST Rate Reduction on Digital News Subscriptions

She quoted that the revenue neutral rate has come below 11.6%, the estimated level in 2019, against 15.3% suggested via the expert panel before the GST launch in 2017. 

The group of ministers on rate rationalization, led by Bihar deputy CM Samrat Chaudhary, has chosen to recommend that the four GST slab rates 5%, 12%, 18%, and 28% – must not be revised even as it looks at reworking other rates.

Sitharaman stated that contrary to the impression created, state finance ministers and the Centre discussed issues in a very pleasant manner, and made the decisions after detailed reviews. She cited that the compensation cess on luxury and other goods will be discussed. 

Although the cess was supposed to end in 2022, the states’ need to meet their spending requirements led the GST Council to agree to extend it up to March 2026 to repay the borrowings. It is anticipated that the Government officials will repay 2.7 lakh crore borrowings by November 2025.