GST rates reduced over time, no increase on any item: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday informed the Rajya Sabha that indirect taxes under the Goods and Services Tax (GST) have significantly decreased since its implementation.

She noted that the average tax rate under the previous indirect tax regime stood at 15.8%, whereas under GST, it has now dropped to 11.3%.

Responding to a query from Nadimul Haque, a Member of Parliament from the All India Trinamool Congress (AITC) representing West Bengal, Sitharaman emphasized the progressive reduction in GST rates.

She stated, "Earlier the tax levied on everyday item 15.8 per cent tax could have been levied without additionally burdening the buyer, consumer. If that was the rate at which the GST rates were brought in, today... the rate has come down to 11.3 per cent. That is the level of reduction of rates which have happened in the GST Council."

She further highlighted that GST has not led to increased taxes on any items but has instead resulted in tax reductions for many products.

During the session, MP Haque also inquired whether the government intended to simplify the GST structure by reducing the number of tax slabs, similar to the reforms implemented in income tax.

In response, Minister of State for Finance Pankaj Choudhary underscored the role of the GST Council, established under Article 279A of the Constitution, as a prime example of cooperative federalism. He explained that all GST-related decisions are made collectively by the Council, which includes finance ministers from all states.

To streamline GST rates, Choudhary stated that a Group of Ministers (GoM) was constituted after the 45th GST Council meeting. Chaired by the Karnataka Finance Minister, the GoM was assigned the task of reviewing and recommending changes to simplify the GST rate structure.

Addressing the issue of GST rate determination, Sitharaman clarified that these decisions are not made unilaterally by the central government. "It is not a singular decision of the Government of India; it has to be a decision of the Council," she said. She further emphasized that state finance ministers are fully empowered to discuss and suggest modifications in GST rates based on their state’s requirements, which are then deliberated upon in GST Council meetings.

Sitharaman encouraged states seeking changes in GST rates to approach the GST Council through their respective finance ministers. The Council, comprising representatives from both central and state governments, convenes regularly to review tax policies and implement necessary adjustments to maintain a balanced and equitable taxation system.