NEW DELHI, Feb 4: Finance Minister Nirmala Sitharaman announced on Tuesday that the GST Council is poised to make a determination regarding a reduction in the number of tax slabs and their rates, as the review process is nearing completion.
Currently, the Goods and Services Tax (GST) operates under a four-tier structure, with rates set at 5, 12, 18, and 28 percent. Luxury items and goods deemed as demerit are taxed at the peak rate of 28 percent, whereas essential commodities and packaged food are taxed at the lowest rate of 5 percent.
The Council, which is led by Sitharaman and includes her state-level counterparts, has formed a group of ministers (GoM) tasked with recommending adjustments to GST rates and a potential reduction in the number of slabs.
“To ensure fairness to the GST framework and the ministers involved, we have already begun the process of rationalizing and simplifying GST rates. This work was initiated nearly three years ago,” Sitharaman remarked during the India Today-Business Today Post Budget Round Table.
She noted that the scope of the review has since expanded, and it is now approaching completion.
Emphasizing the importance of reviewing tax rates on everyday goods that affect ordinary citizens, she stated that it is essential not to miss this opportunity.
“For me, it is crucial to ensure that we do not overlook the chance to reduce the number of rates; achieving fewer and lower rates was part of the original intent. Progress must be made on this, and I anticipate that the GST Council will reach a decision shortly,” Sitharaman expressed.
Following the unveiling of the Union Budget for 2025-26, which includes substantial income tax relief for the middle class, she reaffirmed that the country’s economic fundamentals remain robust and denied any claims of a structural slowdown.
She characterized the tax relief in the Budget as a testament to the Prime Minister’s dedication to taxpayers and dismissed speculations that it was a strategy for the upcoming Delhi assembly elections.
The minister also confirmed that there are no plans to “eliminate” the existing tax regime.
Responding to inquiries about capital expenditure, she stated that capital expenditure has not decreased; instead, it has risen to Rs 11.21 lakh crore, representing 4.3 percent of GDP.
For the fiscal year 2025-26, the Budget proposes a capital expenditure of Rs 11.21 lakh crore, an increase from Rs 10.18 lakh crore for the Revised Estimates of FY25, and up 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 has estimated a fiscal deficit of 4.4 percent of GDP for FY26, while reducing the target for FY25 by 10 basis points to 4.8 percent of GDP. (AGENCIES)
