Madurai, Sept 20: Union Finance Minister Nirmala Sitharaman has announced that as India’s economy strengthens, the Goods and Services Tax (GST) rates, which have already been reduced from four slabs to two, will eventually be unified into a single rate. She made these remarks while addressing the annual meeting of the Tamil Nadu Foodgrains Merchants Association in Madurai.Explaining the evolution of GST, Sitharaman said, “Before GST, tax rates varied from state to state, and multiple indirect taxes burdened businesses. In 2017, GST was introduced with four slabs – 5%, 12%, 18%, and 28% – based on the average of previous levies. Over time, we have simplified this to just two slabs.”
Rejecting criticism that GST has increased taxes, the Finance Minister emphasized that all decisions regarding GST rates were made jointly with state finance ministers. “GST was designed to establish one nation, one tax. It is not an imposition by the Centre alone,” she said.
Nirmala Sitharaman highlighted the growth in revenue collection since GST implementation. “Revenue has increased from ₹7.19 lakh crore in 2018 to ₹22.08 lakh crore today. This financial strength has allowed us to reduce tax slabs. Currently, 375 items fall under either the 5% or 18% categories. Nearly 99% of items have come down from 12% to 5%, while 90% of goods have been reduced from 28% to 18%,” she explained.
She also spoke about the growing acceptance of GST. “In 2017, 65 lakh businesses were registered under GST. Today, 1.51 crore businesses have joined. If GST were a harsh system, why would so many register? Due to these reforms, nearly ₹2 lakh crore has stayed in the hands of the people, increasing purchasing power and stimulating the economy,” Sitharaman said.
The Finance Minister further noted Prime Minister Narendra Modi’s directive to ensure that reforms benefit the middle class and MSMEs. “Forty percent of India’s exports come from MSMEs. Tamil Nadu ranks second in food processing industries and has received eight Geographical Indication (GI) tags for its food products,” she pointed out.
Nirmala Sitharaman concluded that GST reforms are designed with the people in mind. “Direct taxes like income tax and corporate tax apply to specific groups. GST, however, impacts every citizen. That is why these reforms were made keeping the middle class in mind. With a stronger economy, we aim to move towards a single tax rate,” she said.
This statement underscores the government’s focus on simplifying tax structures, boosting economic growth, and easing the tax burden for citizens and businesses alike.