The GST Council will soon take a decision on having fewer and lower rates as the review work is almost complete, Finance Minister Nirmala Sitharaman said on Tuesday.
Currently, Goods and Services Tax (GST) is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are in the lowest 5 per cent slab.
The Council, chaired by Sitharaman and comprising her state counterparts, has set up a group of ministers (GoM) to suggest changes in GST rates as well as reduce slabs.
“To be fair to the GST and the ministers who are all in the council, the work on rationalizing and simplifying GST rates has already commenced. In fact, it had commenced nearly three years ago,” she said at the India Today-Business Today Post Budget Round Table.
Sitharaman said later the scope was widened and now the work is almost complete.
Mentioning that she told ministers in the Council to have a more in-depth look at the rates since they relate to everyday items consumed by common people, the minister said it was important to ensure that an opportunity was not lost.
“For me, it was also important that we don’t lose an opportunity, that we can even bring down the number of rates, which is also the original intent that we wanted fewer rates and lower rates. So work has got to happen on that, and I hope the GST Council will decide on it soon,” Sitharaman said.
Days after presenting the Union Budget 2025-26 that also provides significant income tax relief to the middle class, the minister asserted the country’s economic fundamentals are strong and there is no structural slowdown.
Tax relief in the Budget is a reflection of the prime minister’s commitment to the taxpayers, Sitharaman said and refuted speculations that the move was aimed at Delhi assembly elections.
She also told the gathering that there is no proposal to “shut down” the old tax regime.
On a question related to capital expenditure, the minister further said the capex has not come down, in fact it has increased to Rs 11.21 lakh crore which is 4.3 per cent of the GDP.
For fiscal 2025-26, the Budget proposed to spend Rs 11.21 lakh crore towards capital expenditure (capex), higher than Rs 10.18 lakh crore in the Revised Estimates for FY25. It was Rs 10 lakh crore in FY24, Rs 7.5 lakh crore in FY23, Rs 5.54 lakh crore in FY22 and Rs 4.39 lakh crore in FY21.
The Budget pegged a fiscal deficit of 4.4 per cent of GDP for FY26 and lowered the target for FY25 by 10 basis points to 4.8 per cent of GDP. — (PTI)
