PM Modi initiated GST revamp talks 8 months ago, reveals Nirmala Sitharaman

PM Narendra Modi had said that the government should be sensitive towards people during the tax overhaul, Nirmala Sitharaman stated.

Union Finance Minister Nirmala Sitharaman on Friday disclosed that Prime Minister Narendra Modi had contacted her eight months ago to explore ways of revamping the GST framework.

Speaking to Network18 Group Editor-in-Chief Rahul Joshi, she noted that well before the Prime Minister’s Independence Day address from the Red Fort, where he announced the GST overhaul, he had already initiated discussions with her.

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According to Sitharaman, PM Modi had emphasised the need to simplify the system with a strong focus on easing the burden for the middle class.

She further explained that GST 2.0 has been designed to minimise disputes and ensure clarity for both businesses and states.

“One of the biggest challenges earlier was the constant litigation arising out of multiple tax slabs and ambiguous classifications. With the new system, we have brought in predictability and fairness, so states no longer feel shortchanged, and businesses can plan with confidence,” Sitharaman said.

The Finance Minister also highlighted that the reforms are not just about revenue but about trust-building. “By regrouping items thoughtfully and simplifying rates, we are sending a message that the government values the contribution of small businesses, respects the middle class, and safeguards the interests of farmers,” she noted.

With the new two-tier structure — 5% for essentials and 18% for standard goods and services, along with a 40% rate strictly for luxury and sin goods — the government hopes to reduce compliance burden, increase transparency, and give the GST system a fresh start after eight years of implementation.