NEW DELHI: Finance minister Nirmala Sitharaman has assured states about the Centre's commitment to ensuring fiscal health of states, addressing concerns over revenue getting impacted, at least temporarily, due to a reduction in GST rates.
"Our govt remains committed to safeguarding fiscal stability and economic well-being of all states. The well-calibrated approach in the current GST rate rationalisation exercise - with our focus on the common man, farmers, middle class, MSME and such other targeted segments will ensure an optimal balance between rational tax incidence and robust revenue," she said in a letter to the states, while "recognising" their contribution at the last meeting of the GST council.
Earlier this week, the all-powerful panel of ministers had rationalised rates by lowering the levy on 375 items and raising it on only 25-odd goods and services. The slabs were also changed, with 12% and 28%, set to be abolished from Sept 22, leaving goods and services either in the 5% or 18% bracket in addition to 14 (nine goods and four services) going to the new rate 40%, reserved for sin and luxury goods.
Some of the states, where opposition parties are in power, had raised concerns over "revenue loss", which the Centre argued is unlikely given that lower taxes will boost demand and generate buoyancy. In her letter, FM said: "The spirit of cooperative federalism underpinned our deliberations. The strength of the Council as a forum for in-depth discussions and decisions was demonstrated. The proposals agreed upon in this meeting mark a historical milestone in the journey of GST. It is expected that our decisions will have a far reaching impact on the nation's indirect tax framework. They will also enhance ease of living for citizens, strengthen our economy at large, and help realise India's potential as a global economic powerhouse."
In an interview, she told TOI that the fiscal targets will not be impacted by the decisions on GST rates.
Start a Conversation
Post comment