GST rates to drop soon as RNR falls from 15.8% to 11.4%: Sitharaman

Guwahati, March 9: Finance Minister Nirmala Sitharaman has hinted at a further reduction in Goods and Services Tax (GST) rates, stating that the tax rationalisation process has "almost reached a finale". Speaking during an award ceremony in New Delhi, she highlighted that the Revenue Neutral Rate (RNR) had already declined from 15.8% in 2017 to 11.4% in 2023 and assured that it would "come down even further".

The GST Council, chaired by Sitharaman and comprising state finance ministers, has been working on rationalising tax slabs and addressing key industry concerns. A Group of Ministers (GoM) was formed in 2021 to study the issue, and Sitharaman noted that while the panel has done "excellent work", she intends to personally review their findings before presenting them at the next GST Council meeting.

"We are very close to taking a final call on critical issues like rate reduction and rationalisation of slabs," she said, adding that the government is committed to streamlining GST to benefit businesses and consumers alike.

Commenting on stock market fluctuations, Sitharaman attributed the instability to global factors such as ongoing conflicts, disruptions in the Red Sea, and piracy threats. She stressed that while the government remains vigilant, external economic conditions make it difficult to predict absolute stability in financial markets.

Sitharaman also addressed concerns over excess inventory dumping from foreign markets, particularly in light of the US imposing additional tariffs on Chinese imports. She assured that the Indian government is closely monitoring trade patterns to prevent unfair competition and safeguard small and medium enterprises (SMEs).

Reaffirming the government’s commitment to stake dilution in public sector banks (PSBs), Sitharaman said efforts are underway to increase public float and attract more retail investors. "We want to have more retail investors in public sector banks," she stated, indicating a shift towards greater public participation in banking equity.

Discussing international trade, Sitharaman highlighted the need for balanced trade agreements that prioritise national interests. She hinted at intensified negotiations with the EU and the UK while reviewing existing pacts with Japan, South Korea, and ASEAN to ensure better outcomes for India.

She, however, criticised previous trade agreements signed under the UPA government, arguing that some had not served India’s long-term economic interests.

Sitharaman urged private businesses to be more vocal about investment sentiment, saying, "If they don't speak out, how will the government have any clue on how things are moving?" She reaffirmed confidence in India's strong economic trajectory, highlighting that the country has been the world's fastest-growing major economy since FY21.

As the government moves closer to finalising GST rationalisation, businesses and consumers can expect more tax relief in the coming months, further strengthening India's economic landscape.