New Delhi, Feb 4 (PTI) – Finance Minister Nirmala Sitharaman announced on Tuesday that the GST Council will soon make a decision regarding the reduction of Goods and Services Tax (GST) slabs, with the review process nearly completed.
Currently, India's GST structure includes four tax slabs: 5%, 12%, 18%, and 28%. Luxury and demerit goods are taxed at the highest 28% rate, while essential items and packaged foods fall under the 5% category. The GST Council, which is chaired by Sitharaman and includes state finance ministers, had earlier set up a Group of Ministers (GoM) tasked with recommending changes to the GST rates and simplifying the tax structure by potentially reducing the number of slabs.
Sitharaman highlighted that the process of rationalizing and simplifying the GST system began nearly three years ago and is now close to completion. "To be fair to the GST and the ministers in the council, the work on rationalizing GST rates has already commenced. In fact, it had started nearly three years ago," she stated during the India Today-Business Today Post-Budget Round Table discussion. She added that the scope of the review had since expanded, and the work is almost at its final stage.
Sitharaman emphasized that the changes would have a direct impact on everyday goods consumed by ordinary people. She urged the Council to ensure that this opportunity is not missed and reiterated her commitment to reducing both the number of tax rates and their levels. "For me, it was also important that we don't lose the opportunity to even bring down the number of rates, which was the original intent—to have fewer and lower rates," she said. The Finance Minister expressed hope that the GST Council would arrive at a decision soon.
Following the presentation of the Union Budget for 2025-26, which includes significant income tax relief for the middle class, Sitharaman reaffirmed that India's economic fundamentals remain robust and that there is no structural slowdown. She also addressed speculation surrounding the Budget's tax relief measures, asserting that they reflect the Prime Minister's commitment to taxpayers and were not linked to upcoming elections in Delhi.
In response to concerns about the existing tax regime, Sitharaman clarified that there is no plan to "shut down" the old tax structure. She also discussed capital expenditure (capex), stating that the government has not reduced its capex, but instead increased it. For FY26, the Budget proposed a capex of Rs 11.21 lakh crore, accounting for 4.3% of GDP, up from Rs 10.18 lakh crore in the Revised Estimates for FY25. This marks a steady increase from Rs 10 lakh crore in FY24, Rs 7.5 lakh crore in FY23, Rs 5.54 lakh crore in FY22, and Rs 4.39 lakh crore in FY21.
The Budget for 2025-26 also pegged a fiscal deficit of 4.4% of GDP, while lowering the fiscal deficit target for FY25 by 10 basis points to 4.8% of GDP.
With these measures, the government aims to further strengthen the country's fiscal health and support sustained economic growth.
Currently, India's GST structure includes four tax slabs: 5%, 12%, 18%, and 28%. Luxury and demerit goods are taxed at the highest 28% rate, while essential items and packaged foods fall under the 5% category. The GST Council, which is chaired by Sitharaman and includes state finance ministers, had earlier set up a Group of Ministers (GoM) tasked with recommending changes to the GST rates and simplifying the tax structure by potentially reducing the number of slabs.
Sitharaman highlighted that the process of rationalizing and simplifying the GST system began nearly three years ago and is now close to completion. "To be fair to the GST and the ministers in the council, the work on rationalizing GST rates has already commenced. In fact, it had started nearly three years ago," she stated during the India Today-Business Today Post-Budget Round Table discussion. She added that the scope of the review had since expanded, and the work is almost at its final stage.
Sitharaman emphasized that the changes would have a direct impact on everyday goods consumed by ordinary people. She urged the Council to ensure that this opportunity is not missed and reiterated her commitment to reducing both the number of tax rates and their levels. "For me, it was also important that we don't lose the opportunity to even bring down the number of rates, which was the original intent—to have fewer and lower rates," she said. The Finance Minister expressed hope that the GST Council would arrive at a decision soon.
Following the presentation of the Union Budget for 2025-26, which includes significant income tax relief for the middle class, Sitharaman reaffirmed that India's economic fundamentals remain robust and that there is no structural slowdown. She also addressed speculation surrounding the Budget's tax relief measures, asserting that they reflect the Prime Minister's commitment to taxpayers and were not linked to upcoming elections in Delhi.
In response to concerns about the existing tax regime, Sitharaman clarified that there is no plan to "shut down" the old tax structure. She also discussed capital expenditure (capex), stating that the government has not reduced its capex, but instead increased it. For FY26, the Budget proposed a capex of Rs 11.21 lakh crore, accounting for 4.3% of GDP, up from Rs 10.18 lakh crore in the Revised Estimates for FY25. This marks a steady increase from Rs 10 lakh crore in FY24, Rs 7.5 lakh crore in FY23, Rs 5.54 lakh crore in FY22, and Rs 4.39 lakh crore in FY21.
The Budget for 2025-26 also pegged a fiscal deficit of 4.4% of GDP, while lowering the fiscal deficit target for FY25 by 10 basis points to 4.8% of GDP.
With these measures, the government aims to further strengthen the country's fiscal health and support sustained economic growth.
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