No Friction Between Centre And States Over GST: FM Sitharaman

Nirmala Sitharaman highlighted that the priority during Union Budget discussions is simplifying and easing compliance for taxpayers, rather than focusing solely on revenue generation

Finance Minister Sitharaman noted the importance of tackling tax evasion and ensuring compliance, stating that the goal should be to make compliance easier than evasion.

Source : PTI

Union Finance Minister Nirmala Sitharaman dismissed claims of "friction" between the Centre and States regarding the Goods and Services Tax (GST), stressing the importance of respecting the federal structure of this key economic reform. Speaking at a meeting organised by the Revenue Bar Association on Thursday, Sitharaman highlighted that the priority during Union Budget discussions is simplifying and easing compliance for taxpayers, rather than focusing solely on revenue generation.

"Revenue is the last consideration in every budget meeting. You may think otherwise, but the truth is simplifying and easing compliance always comes first," she said. Sitharaman also mentioned that even during consultations with Prime Minister Narendra Modi, the focus was on making the tax system easier for the public, with revenue generation taking a backseat.

The Finance Minister pointed out that the average GST rate had decreased to 12.2 per cent in 2023, lower than the originally suggested revenue neutral rate (RNR) of 15.3 per cent. "We put in significant effort at the ground level to bring about 'one nation, one tax'," she noted.

Addressing concerns about friction between the Centre and states, Sitharaman firmly denied any discord. "I completely deny that there's any friction in the GST relationship with states. The Centre is not extracting revenue from them. The federal structure in the GST framework must be respected, and both the Centre and States are working together to promote development and widen the tax base," she added.

The Finance Minister further noted the importance of tackling tax evasion and ensuring compliance, stating that the goal should be to make compliance easier than evasion.

In response to suggestions of discord at GST Council meetings, Sitharaman stated that the meetings are focused on simplifying and rationalizing the tax system. "For those who believe that political discord dominates the meetings, I would like to clarify that these are the forums where the least politics is involved. Every finance minister is keen on generating revenue and expanding the tax base for the benefit of their constituency," she concluded.