"States are also being cautious about reducing GST rates: Finance Minister Sitharaman"

 Finance Minister Nirmala Sitharaman stated on Tuesday that states are also cautious about proceeding with reductions in tax rates. She clarified that her intention was not to criticize them, explaining that states are keen to generate revenue without imposing a heavy burden on the public. “When state officials take their positions, they are aware that their responsibility is not to appease anyone but to safeguard revenue,” she mentioned to reporters.

"States are also being cautious about reducing GST rates: Finance Minister Sitharaman"

These remarks were made in the context of ongoing discussions about revising the rates on goods and services under the Goods and Services Tax (GST). Sitharaman suggested that any changes to these rates would take some time to implement. The GST Council is expected to begin discussions on these potential changes during its meeting scheduled for September 9.

In recent months, the central government has faced criticism over the high GST rates. However, Sitharaman defended the current rates by pointing out that they are lower for nearly all goods and services compared to the rates in July 2017, when the GST was first introduced. This introduction replaced multiple other taxes and cesses.

She also addressed misinformation circulating on social media, stating, “There is a lot of vicious, false campaigning on social media. I won’t delve into that... the entire country is benefiting from GST.” She elaborated that aside from the adjusted rates, the elimination of border checks has resulted in smoother and faster movement of goods.

Additionally, Sitharaman noted that the revenue-neutral rate has now dropped below 11.6%, lower than the 15.3% suggested by an expert panel before GST was launched in 2017. This is also below the level estimated in 2019.

The group of ministers on rate rationalization, led by Bihar's Deputy Chief Minister Samrat Chaudhary, has recommended maintaining the current four GST slabs—5%, 12%, 18%, and 28%—while exploring adjustments to other rates.

Sitharaman also emphasized that, contrary to popular belief, the discussions between state finance ministers and the central government are conducted in a cordial manner, and decisions are made following thorough deliberations. She mentioned that the extension of the compensation cess on luxury and sin goods is another topic up for discussion. Initially, this cess was supposed to end in 2022, but to help states meet their financial requirements, the GST Council agreed to extend it until March 2026 to cover their borrowings. Government officials anticipate that the borrowings, totaling 2.7 lakh crore, will be repaid by November 2025.