GST Rate to be Reduced Soon; Rationalisation and Tax Review in Final Stages: FM Nirmala Sitharaman:

GST Rate to be Reduced Soon; Rationalisation and Tax Review in Final Stages: FM Nirmala Sitharaman The Goods and Services Tax (GST) Council is in the last stages of reviewing the GST structure, and the levy would be reduced shortly, said union finance minister Nirmala Sitharaman, who leads the Central indirect tax authority, on Saturday. Speaking at the Awards for Corporate Excellence in Mumbai, Sitharaman stated that the GST Council's ministerial group has done excellent work, which is now in its final stages, and that the minister will review the proposals again before presenting them to the central indirect tax body for decision. This is expected to be discussed at the next Council meeting. "We are very close to making a final decision on some of the most critical issues—reduction, rate rationalisation, and looking at the number of slabs, among other things," said the minister, noting that current rates are lower than when the indirect tax reform was implemented in 2017. The GST Council, chaired by the Union Finance Minister, has appointed state ministers as members. GST rates have fallen since the law was enacted in 2017, and the current amendment is expected to decrease the rate even further, according to the union finance minister. "At the time when the GST was launched, the revenue neutral rate was about 15.8%," according to Sitharaman. The term "revenue neutral rate" refers to a GST rate that would result in collecting the same amount of revenue from the items covered by the new tax system both before and after it was implemented. It would not raise the cost of a product for consumers while keeping the government's revenue from the levy. "Since the commencement of GST, and until 2023, we have already reduced the 15.8% to 11.4%, implying that rates have come down... So the clue you're searching for—it'll come down much further," Sitharaman explained. Sitharaman also requested the industry to share their views on investment with the government at a time when private sector investments were concentrated in a few areas of the economy. The union finance minister also stated that it would be imprudent for her to remark on the topic of foreign institutional investors dumping stakes in Indian stock markets due to increased capital gains tax while the parliament's budget session was still ongoing. The parliament will resume its Budget session on Monday, March 10. Finance Minister Sitharaman increased the country's long-term capital gains tax from 25% to 12.5% in the July 2024 budget. Sitharaman stated that the sentiment of faith in India's potential was "missing," resulting in a growth rate of approximately 6.5-6.7% for FY26. She added that such confidence will allow India to expand at a rate of around 8% in the upcoming financial year. Sitharaman stated that India is the world's fastest-growing economy, with a consistent 6.5-7% growth rate in all post-Covid years and across all industries. According to Sitharaman, mood drives the economy, just as it does capital markets. "If sentiments can govern our markets and therefore all of us will be buoyed at one point and completely watered down at the other, so is the economy," she pointed out. The finance minister expressed concern over the dumping of goods into India, especially at a time when tariffs are being employed aggressively. However, imports cannot be completely stopped because they are cheaper for small firms, according to Sitharaman. The finance minister stated that any action taken against dumping of cheap goods should take into account the input of all stakeholders, including small businesses. Finance Minister Sitharaman stated that the union commerce ministry is now evaluating several trade agreements inked in the past, which allowed many foreign goods to enter Indian markets unchecked. She claimed that these agreements were quickly reached and frequently included ambiguous language. "Today the commerce ministry is engaged in reviewing many of the FTAs signed, whether it is with Japan, whether it is with Korea, whether it is with ASEAN," according to Sitharaman. "There is a torrent of things coming in that you are unable to control. Duties make no difference to them because FTAs enable it," she noted. The word FTA stands for Free Trade Agreement, while ASEAN stands for the Association of Southeast Asian Nations. She stated that current negotiations over free trade or bilateral agreements incorporate lessons learned from earlier such agreements and that putting India's interests first is a priority in such negotiations. "Unless you negotiate for India's own good, even your negotiation will not be taken seriously by the other side because they are very clear on what they want," she said. The essential principles that India would follow in trade discussions, according to Sitharaman, are ensuring that India's interests are reflected in the agreement, increasing the number of bilateral agreements, and keeping the text of the agreement consistent so that conflicts may be avoided. Sitharaman also said that the World Trade Organisation was unsuccessful at resolving trade disputes, emphasising the importance of clear language in bilateral agreements in the face of tariff uncertainty.