FM counters Chidambaram on GST reforms, denies ‘fleecing earlier, slashing now’ charge

Countering the charge that the Union government was bringing the GST reforms now after having fleeced the people for over eight years, Finance Minister Nirmala Sitharaman on Friday said the previous rates were decided by the Empowered Committee and only now the opportunity has come.

“The previous rates were imposed neither by former finance minister Arun Jaitley nor Prime Minister Narendra Modi or the NDA government. It was the decision of the Empowered Committee, comprising finance ministers of all states, from all parties. Jaitley himself was not for that. With each state having different rates of surcharge, VAT and other taxes, it was decided to have the closest average of all put together. Only now the opportunity has come to rationalize it,” she said, responding to former Union finance minister and Congress veteran P Chidambaram, without naming him, at the 80th foundation day of the TN Foodgrains Merchants Association, in Madurai.

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“A senior leader had said that we have fleeced the people with higher GST rate for so long and have slashed it now. You all know who he is. It is being politicised. Rahul Gandhi had described the previous rates as Gabbar Singh tax and there was a hue and cry in Parliament earlier,” she said and explained the GST tax base in 2017 was only 65 lakh which has grown exponentially to 1.51 crore yielding a revenue of Rs 22.5 lakh crore from 7.5 lak crore annually. “The widening of the tax base has made this possible, she added.

Congress stalwart Chidambaram, while welcoming the rationalization of GST, had in a post recently on ‘X’, has asked “Pray answer one question: if 5 percent is a reasonable and appropriate GST rate now, why was it not reasonable and appropriate for 8 years? Did the Government not exploit the Indian consumer by levying 12 per cent during the last 8 years?”

“Neither Modi nor the NDA government had to enact a drama to hike to fleece and then slash. When the opportunity came, it was slashed with rates of 375 items being brought down. During the time of Indira Gandhi tax burden was very high. But, now, Income Tax exemption has been hiked to 12 lakh,” the finance minister maintained.

On how to offset the revenue loss to the government, she said, “Massive spending will boost production and increase jobs. This in turn will widen the tax base. With these reforms people have been given Rs 2 lakh crore in their hands which is 10 times more than what the production linked incentive for semiconductor manufacturing or for the auto sector is. This will spur economic growth.”

Crediting the Modi government with lifting 25 crore people out of poverty, she added that GST could be brought further down but not in the present as the consumption pattern is not the same in cities and in the rural hinterland.