New Delhi, Sep 9 : Finance Minister Nirmala Sitharaman said on Tuesday that the Next Gen GST 2.0 reforms announced by the PM Modi-led government were in the making for more than 18 months and were not related to the US tariff hikes.
Speaking at the NDTV Profit conclave here, the Finance Minister said that when the major announcements on Income Tax happened during the presentation of the Union Budget, the Prime Minister had reminded her about the GST reforms.
"It was not as if a crisis was on us because of US tariff measures," the Finance Minister explained. She further stated that it was in May, when she realised there was a worthy pack to present to the Prime Minister.
“We are evaluating the impact of the US tariff hike”, Sitharaman added.
She also said that all the finance ministers of states were in favour of the tax rate cuts at the GST Council meeting.
"To be fair to state finance ministers, they were all on board with rate rationalisation," Sitharaman said.
She further stated that there was no acrimony at any point in time. But states certainly repeated their concerns at least two times about the revenue impact.
However, she clarified that compensation to states from the Centre for shortfalls in tax collections had ended in June 2022.
"There is no compensation since 2022," the Finance Minister said when asked about the states complaining of missing out on compensation.
The compensation cess being collected right now will go into repaying the loans availed during the Covid-19 pandemic, she further explained.
"Better collection efficiency improves overall collections, not as if the Centre is sitting with a huge suitcase to pay everyone,” she remarked.
She also pointed out that 140 crore Indians will benefit from the reforms and the farmers and MSMEs who are driving the economy and creating employment will get a major boost from the GST rate cuts.
Asked whether the stock markets should have responded more strongly to the Next Gen reforms announced as part of the GST 2.0 package, the finance minister said the stock markets react to a lot of other factors such as global uncertainty that is currently prevailing.
In answer to a question, she said, "I do observe the stock markets, but I am more concerned about the impact of reforms on India’s citizens. I want the reforms to go well with the citizens rather than the market. I am not really worried about what is happening in the markets.”
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