Union Finance Minister Nirmala Sitharaman on Tuesday informed the Rajya Sabha that indirect tax under the Goods and Services Tax (GST) has significantly reduced over the years since its implementation.
The minister stated that the average tax under the previous indirect tax regime was 15.8 per cent under GST it has now come down to 11.3 per cent.
Nirmala Sitharaman’s response came to question by Nadimul Haque, Member of Parliament from the All India Trinamool Congress (AITC) representing West Bengal.
Haque had asked whether the government planned to simplify the GST structure by reducing the number of tax slabs, similar to the reforms made in income tax.
Highlighting the reduction in GST rates over time, the Finance Minister said “Earlier the tax levied on everyday item 15.8 per cent tax could have been levied without additionally burdening the buyer, consumer. If that was the rate at which the GST rates were brought in, today… the rate has come down to 11.3 per cent. That is the level of reduction of rates which have happened in the GST Council”.
She said under GST, taxes have not gone up even on a single item but it has reduced on many items.
Speaking further, the Finance Minister clarified that the rates are not decided solely by the central government. It is not a singular decision of the Government of India; it has to be a decision of the Council, she said.
Finance Ministers from all states are fully empowered to discuss and propose changes in GST rates based on the needs of their respective states. These discussions are then taken up for consideration in the GST Council meetings, Sitharaman said.
She said if any state wants any changes in GST rates of any item they should approach the GST council through their finance minister.
Further, the Minister of State for Finance, Pankaj Choudhary, also said that the GST Council, established under Article 279A of the Constitution, is a strong example of cooperative federalism.
He stressed that all GST-related decisions are taken by the GST council which is represented by finance ministers of all states.
A Group of Ministers (GoM) was formed following the 45th GST Council meeting to rationalize GST rates. The GoM, chaired by the finance minister from Karnataka, was tasked with reviewing and suggesting changes to simplify the GST rate structure, Choudhary said.