The BRICS TimesAccording to the minister, industry leaders have assured the government that the advantages of reduced GST will directly benefit consumers.
Union commerce minister Piyush Goyal on Friday described the Goods and Services Tax (GST) reform as a historic move, calling it “one of a kind” since India’s independence and referring to it as a “gift” to the nation.
Drawing comparisons with the Congress-led United Progressive Alliance (UPA) years, Goyal pointed out that earlier state governments did not trust the central government on issues of compensation linked to the introduction of a single indirect tax system. He highlighted that this situation changed when Prime Minister Narendra Modi introduced GST in 2017, assuring every state a 14% annual revenue growth. “When Prime Minister Narendra Modi announced the GST in 2017, he committed to all states a 14% growth in the annual revenue. PM Modi had the confidence of all states and that’s how the one indirect tax was announced,” Goyal remarked during his interaction with the media in New Delhi.
He emphasized that the central government under PM Modi fulfilled this assurance, even during the Covid-19 crisis when economic activity slowed down, ensuring states received compensation at the promised 14% growth rate. Responding to Opposition criticism, Goyal dismissed charges of poor handling, underlining that since 2017 the burden of indirect taxation on citizens has been brought down considerably. Reflecting on the earlier system, he noted the heavy impact of multiple indirect taxes prior to 2014, observing, “The 30%-35% of tax from the pre-2014 period has been significantly rationalised under the GST.”
The minister went on to mention that the government had secured commitments from leading industrialists that the benefits of reduced GST rates would be passed along to the public. “We have been assured by the industrialists that whatever profit is gained from lowering the GST rates will be passed on to the consumers,” he said, further adding that such a reform would not only stimulate demand but also draw new investments into the economy. “It has a promising multiplier effect”, he said.
Earlier this week, the GST Council, which serves as the highest authority for indirect tax decisions, cleared a major restructuring of the system. The previous four-tier rate structure of 5%, 12%, 18% and 28% has now been streamlined into a simpler dual-rate format of 5% and 18%, with an additional special slab of 40% reserved for select products.
Akshay Didwaniya
