States are also cautious on GST rate cuts: FM Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday said that even states were cautious on moving ahead with rate cuts.

"I am not blaming them...they want revenue without burdening the people...when they sit there, they know their job is not to please anyone but protect revenue," she told reporters.

The comments come amid discussions to rework the rates on goods and services, which Sitharaman indicated will take some time. The GST Council is expected to kick off the debate in its meeting on September 9.


In recent months, the Centre has faced criticism for high GST rates, but Sitharaman countered it, saying that on almost all goods and services rates were lower than July 2017, when the new regime kicked in after subsuming several taxes and cesses.

"There is a lot of vicious, false campaign on social media. I won't get into that... the entire country is benefiting from GST," she said, explaining that apart from rates, border checks have been removed making goods movement smoother and faster.

She also said that revenue neutral rate has now come below 11.6%, the level estimated in 2019, against 15.3% recommended by an expert panel before GST launch in 2017.

The group of ministers on rate rationalisation, led by Bihar deputy CM Samrat Chaudhary, has decided to recommend that the four slabs - 5%, 12%, 18% and 28% - should be left unchanged even as it looks at reworking other rates.

Sitharaman said contrary to impression that is created, state FMs and the Centre discuss issues in a very congenial manner and a decision is taken after detailed deliberations. FM also said that compensation cess on luxury and sin goods are also going to be discussed. While cess was to end in 2022, the requirement of states to meet their spending requirements led to the GST Council agreeing to extend it up to March 2026 to repay the borrowings. Govt officials expect the 2.7 lakh crore borrowings to be repaid by Nov 2025.

(With TOI inputs)