Nirmala Sitharaman Clarifies GST Related Rumours

Ahead of the crucial meeting of the GST Council, Finance Minister Nirmala Sitharaman said the buzz of an increase in GST rates is everywhere other than her office.

She was responding to a question on talk of current GST rates of 5, 12, 18 and 28 per cent being raised to make up for the fall in revenues that has even hampered giving compensation to states for loss of revenue from implementation of the indirect tax regime.

“The buzz is everywhere other than my office. I don’t know where this is coming from. I have not been to GST Council yet. We have not had any conversation yet. But it’s good to see all this churning outside, it helps to clarify our thought processes,” she remarked.

Sitharaman, however, did not rule out a hike in GST rates, saying her ministry is yet to apply its mind to it.

“I am saying we as a team have not spoken yet on what we want to go to the GST Council with,” she said.

She added there is no denying the fact that GST compensation is pending to all States. “No one is denying it is their (states’) right. I fully acknowledge it is their right and I have also given the figures out as to what was the collection, how much was paid in 2017-18, in 2018-19 and up to October 31 and I am also saying that it is an article of faith, cooperative federalism and we shall keep up what has been committed in terms of giving compensation,” she added.

States had surrendered powers to collect taxes on goods and services after local levies got subsumed into the Goods and Services Tax (GST) from July 1, 2017. They were guaranteed through legislation that they will be compensated for any revenue loss in the first five years of GST implementation.

This monthly compensation was to be paid within two months but States have not received any such amount since August 2019.