GST Revamp to Boost Consumption, Investment, and Jobs: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman told Business Standard that following the recent reforms in the goods and services tax (GST), the government will now shift its focus toward accelerating disinvestment in public sector enterprises, enhancing operational efficiency, and monetising underutilised government assets.

GST Reforms Set the Stage for Economic Growth

Union Finance Minister Nirmala Sitharaman Sitharaman emphasised that the GST rate rationalisation will create a virtuous cycle of consumption, investment, and job creation. By easing tax rates, consumers benefit directly, which increases demand. Higher demand encourages investment, capacity expansion, and eventually leads to more jobs and higher incomes.

Trust Based Implementation

The Finance Minister said the government is relying on a trust based approach with industry to ensure GST rate cuts are passed on to consumers. “We start with trust. Industries have already given assurances, and our intention is to ensure consumers benefit,” she noted.

Addressing Export and Trade Challenges

On the 50% tariff imposed by the US administration, Sitharaman explained that the government is assessing sector specific impacts. “Unless an industry provides details on the impact, meaningful relief cannot be designed. We are collecting data and will act based on findings,” she said.

GST Appellate Tribunal and Future Reforms

Sitharaman also provided updates on the GST appellate tribunal, stating that rules and operational guidelines will be finalised by the end of September, with hearings starting across various state benches by November. The central appellate authority will be based in Delhi.

Regarding faceless GST assessment, she said the government will first stabilise current reforms before considering a system similar to the Income Tax Department’s faceless assessment, noting the need to coordinate CGST, SGST, and IGST components.

Sector Specific Changes

The Finance Minister addressed concerns regarding GST on job work rising from 12% to 18%, particularly affecting small apparel manufacturers. She clarified that the rate aligns with most service taxation and that businesses need to adjust their operational formulas accordingly.

Sitharaman also ruled out relief for insurance companies for revenue losses arising from the zero rate on insurance services for individuals.

Read More: GST 2.0 Impact on ITC: What Lower FMCG Taxes and Higher Tobacco Levies Mean.

Conclusion

The GST reforms aim to stimulate economic activity by boosting consumption, encouraging investment, and supporting job creation. Alongside, the government is prioritising disinvestment, asset monetisation, and operational efficiency in public sector enterprises, reflecting a comprehensive approach to reviving India’s growth trajectory while ensuring smooth implementation of tax reforms.

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