Union Finance Minister Nirmala Sitharaman has dismissed claims of "friction" between the Centre and states over Goods and Services Tax (GST), emphasizing the importance of respecting India's federal structure in economic reforms. Addressing a meeting hosted by the Revenue Bar Association, Sitharaman clarified that simplifying and easing taxpayer compliance has been the priority during Union Budget discussions, not revenue generation.
She highlighted that consultations, including those with Prime Minister Narendra Modi, focused on making tax compliance easier for taxpayers. "Revenue is the last consideration in these meetings. Simplifying, easing, and ensuring compliance comes first," she stated.
Sitharaman also pointed out that the average GST rate has dropped to 12.2% in 2023, well below the revenue-neutral rate of 15.3%. She attributed the success of GST implementation to efforts made at the grassroots level to build a "one nation-one tax" system.
Addressing concerns about tensions between the Centre and states, Sitharaman strongly denied any discord. She emphasized the need for both levels of government to work together to widen the tax base and facilitate developmental activities. "The Centre is not extracting revenue from states. The spirit is to respect the federal structure and work together," she added.
She also underscored the importance of tackling tax evasion, urging both Centre and state governments to make compliance easier for taxpayers, ensuring it is more appealing to comply than evade.
At GST Council meetings, finance ministers from various states focus on simplifying tax laws, rationalizing rates, and enhancing revenue collection. "Contrary to popular belief, politics plays a minimal role in these discussions," Sitharaman noted, stressing that the goal is to ensure justified revenue collection that ministers can explain to their constituents.
In conclusion, the Finance Minister reiterated that GST's success lies in fostering a cooperative federal structure, simplifying the tax system, and making compliance easier for all stakeholders.
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