GST Reforms Were Pre-Planned, Not a Reaction to US Tariffs: Finance Minister

The Union Minister of Finance and Minister of Corporate Affairs, Smt Nirmala Sitharaman, on Tuesday clarified that the recent GST Reforms are not linked with the 50% tariff levied by US President Donald Trump. While speaking at an event, she said that the GST reforms were already planned and are not a reaction to US tariffs.

Some people were linking the recent GST changes to the cover-up of a USD 48 billion impact on Indian exports to the US. She informed us that internal discussions were held regarding the reforms. And then these decisions were discussed in the GST council meeting. She also informed us that the decision to reduce GST slabs and give exemptions for health and life insurance premiums had been discussed for over a year. She said it took time to put together a strong set of proposals, and she was able to present them to the Prime Minister only in May.

The Finance Minister said that the reforms had been in progress even before last year’s Budget. The Prime Minister had reminded her back then to focus on giving some relief to the common people.

While answering the concerns from states regarding the revenue loss, she pointed out that the compensation cess given to states had already ended in 2022. She explained that the cess collections are being used to repay the loans taken during the COVID-19 pandemic. She highlighted that focus should now be on improving tax collection, adding, “It is not like the Centre is sitting with a big suitcase of money to pay everyone.”