‘Every GST item scrutinised’: FM Sitharaman explains what went behind GST 2.0 focused at middle class, farmers

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Friday said that drafting the new GST proposal was a “fascinating” and “absolutely rewarding” exercise for her.

In an interaction with Network18 Group Editor-in-Chief Rahul Joshi, Sitharaman said the focus of GST 2.0 was to review commodities consumed by farmers and the middle class.

“I had to do a dredging kind of an exercise where every item which comes under GST had to be looked at – not just by their codes or names but also in terms of regrouping them from the point of view of daily use items, that which is consumed by the middle-class or poor in particular, we looked at those that are going to hit the farmers and so on,” Sitharaman said.

She further added: “Eventually, daily-use items or items which are necessary for the transition of India from emerging, developing economy to a Viksit Bharat cannot be on the back of just the approach that we need more infrastructural development, but also that the aspirations of the growing families will have to be met.”

The finance minister also asserted that the new GST regime will improve consumption by citizens and would not impact capital expenditure. “Citizen now has a choice to spend money. Now prices of everything have come down,” she said.

The 56th GST council meeting decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates.

The rate cuts will be effective from September 22.

During the interaction, Sitharaman said Prime Minister Narendra Modi had sought goods and services tax (GST) reforms eight months ago. “The Prime Minister did announce it from the Red Fort on Independence Day. But even about eight months ago, he called me once and had a long talk on how GST can be revamped and looked at from the point of view of process and the tax rates for the common man. He asked me if there was a way in which we could make it simpler. I had agreed to come back to him," said Sitharaman.