Decision to hike GST rates on certain items taken to curb tax leakage, clarifies FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman has clarified that the recent decision to hike the GST rates on certain items was taken to curb the tax leakage. In a series of tweets, she said, the decision was a much-needed one to curb the tax leakage. She said, it was considered at various levels including by officers, the Group of Ministers and was finally recommended by the GST Council with the complete consensus of all members.

Mrs Sitharaman said, this was an unanimous decision by the GST Council. All states were present in GST Council when the issue was raised by the Group of Ministers on Rate Rationalisation in the 47th meeting held at Chandigarh last month. She said all States, including non-BJP States like Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana and Kerala have agreed with the decision. She said, there has been a lot of misconceptions about this which have been spread. The Minister said, the Group of Ministers that recommended the changes was comprised of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa and Bihar and was headed by Karnataka Chief Minister.

The Finance Minister said, when GST was rolled out, a GST rate of five per cent was made applicable on branded cereals, pulses and flour. Later, this was amended to tax only such items which were sold under registered brand or brand on which enforceable right was not foregone by supplier. However, soon rampant misuse of this provision was observed by reputed manufacturers and brand owners and gradually GST revenue from these items fell significantly.