GST hike a unanimous decision taken by all states, 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, and the Group of Ministers, and was finally recommended by the GST Council with the complete consensus of all members. Mrs Sitharaman said, this was a 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 that 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 the Karnataka Chief Minister.

The @GST_Council has exempt from GST, all items specified below in the list, when sold loose, and not pre-packed or pre-labeled.

They will not attract any GST.

The decision is of the @GST_Council and no one member. The process of decision making is given below in 14 tweets. pic.twitter.com/U21L0dW8oG

— Nirmala Sitharaman (@nsitharaman) July 19, 2022

The Finance Minister said, when GST was rolled out, a GST rate of five percent was made applicable on branded cereals, pulses, and flour. Later, this was amended to tax only such items which were sold under a 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.Mrs Sitharaman said, this was resented by suppliers and industry associations that were paying taxes on branded goods. They asked the government to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by States. She said, the Fitment Committee consisting of officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana, and Gujarat had also examined the issue at several meetings. She said, they made the recommendations for changing the modalities to curb the misuse.