Finance Minister Nirmala Sitharaman said on Tuesday that states are being cautious about reducing Goods and Services Tax (GST) rates. She acknowledged that while states aim to protect their revenue without putting a burden on citizens, they are also mindful of not making hasty decisions.
Sitharaman's comments come as discussions about adjusting GST rates continue. The GST Council is scheduled to start its debate on this topic in a meeting on September 9.
Recently, the Centre has faced criticism for high GST rates. In response, Sitharaman highlighted that most GST rates are lower compared to July 2017, when the GST system was introduced. She also noted that false claims on social media are misleading, emphasizing that GST has streamlined goods movement by removing border checks and has overall benefited the country.
She pointed out that the revenue-neutral rate has decreased to below 11.6%, a reduction from the 15.3% recommended before the GST's implementation in 2017.
A group of ministers, led by Bihar's Deputy Chief Minister Samrat Chaudhary, has decided to keep the current four GST slabs—5%, 12%, 18%, and 28%—unchanged while reviewing other rates. Sitharaman assured that discussions between state and central finance ministers are conducted amicably and decisions are made after thorough discussions.
The continuation of the compensation cess on luxury and sin goods will also be on the agenda. Originally set to end in 2022, this cess has been extended to March 2026 to cover state borrowings, with government officials anticipating repayment of the Rs2.7 lakh crore borrowings by November 2025.
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