Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday that the average indirect tax under the Goods and Services Tax (GST) has significantly reduced since its rollout. She stated that the average tax under the previous indirect tax regime was 15.8%, while under GST, it has now come down to 11.3%.
GST Rates Lowered Over Time
Responding to a query from AITC MP Nadimul Haque, Sitharaman emphasized that taxes on everyday items have not increased under GST but have, in fact, reduced over time.
"Earlier, a 15.8% tax could have been levied without additionally burdening the consumer. However, under GST, the tax rate has come down to 11.3%. This reduction has happened through decisions taken in the GST Council," Sitharaman explained.
She reiterated that no item has seen a tax hike under GST, while several essential goods have witnessed rate reductions.
Will GST Slabs Be Reduced?
MP Haque also inquired whether the government planned to simplify the GST structure by reducing the number of tax slabs, similar to income tax reforms. Addressing this, Minister of State for Finance Pankaj Choudhary highlighted the role of the GST Council, which was established under Article 279A of the Constitution.
Choudhary stressed that all GST-related decisions are taken collectively by the GST Council, where Finance Ministers of all states play a key role.
"A Group of Ministers (GoM) was formed after the 45th GST Council Meeting to review and suggest changes for simplifying the GST rate structure," he added. The committee is headed by Karnataka's Finance Minister.
States Have the Power to Recommend GST Changes
Clarifying concerns over GST rate changes, Sitharaman reiterated that the rates are not solely decided by the central government.
"It is not a singular decision of the Government of India; it has to be a decision of the GST Council," she said.
She encouraged state governments to propose rate changes through their respective Finance Ministers, who can raise the issue in GST Council meetings for discussion and approval.
GST Council's Role in Taxation
The GST Council, which includes representatives from both Central and State Governments, meets regularly to review tax policies and make necessary adjustments. The Council ensures a fair and balanced taxation system while addressing state-specific concerns regarding tax rates.
With indirect taxes declining and GST rate rationalization under discussion, taxpayers can expect continued reforms aimed at simplifying and streamlining the GST structure.
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