Sitharaman writes to state FMs, thanks them for role in GST overhaul

New Delhi: In a gesture underscoring the spirit of cooperative federalism, Union Finance Minister Nirmala Sitharaman has written to finance ministers of all states, expressing gratitude for their support and active role in helping implement the landmark overhaul of the goods and services tax (GST) regime.

In an interview with PTI, Sitharaman said states made their view on the proposal to rejig tax rates but ultimately agreed that it was for the benefit of the common man, an argument that helped reach a unanimous decision at the GST Council meeting earlier this week.

The overhaul, which will from September 22 see rates of a wide swath of products -- from butter to chocolates and shampoos to tractors and air conditioners -- come down, was agreed at a meeting of the GST Council on September 3.

The panel is headed by Sitharaman and includes representatives of all states and Union Territories.

"Yesterday, I have written a letter to each finance minister thanking them, saying, you can have any number of intense discussion and argument, but finally, the Council rose to the occasion and gave relief to the people of India, to all people of India. And, I am grateful for that gesture. So, I wrote that letter," she said.

She said the work at the Council was truly "remarkable".

Despite apprehensions over loss of revenue from classifying most products into categories: 5 per cent for common use goods and 18 per cent for everything else, and doing away with 12 and 28 per cent slabs, the GST Council took a unanimous decision for the GST rejig.

The panel was to meet for two days starting September 3 to discuss the proposal made by the Centre but ended up approving it on the very first day after a marathon daylong meeting.

"So the sense of the house was, this is a proposal which is going to undoubtedly benefit the common man. There is no point in standing against it... Ultimately everybody came together for a good cause, and I'm truly very grateful," Sitharaman said.

The minister said states were always in favour of rate reduction and their only concern was with regard to their revenue implications post-tax cuts.

"I even appealed to them, saying, for the sake of the people of India, Please. It's not just the states. It's even the Centre that is going to get affected by the reduction. But we'll make up for it because once the rates come down, people are going to come out to buy, and that will take care of it (revenue impact). That's how consensus was arrived at," she said.

Sitharaman, speaking at a press conference following the GST Council meeting, had expressed her gratitude to the states for their cooperation and collaborative efforts in implementing one of India's most significant tax reforms.

On Saturday, she noted that the Council had given a patient hearing to every comment and suggestion put forward by its members.

"All points were thoroughly deliberated before arriving at a consensus," she said.

She also highlighted the inclusive nature of the discussions, adding that several ministers who wished to speak again after their initial points had already been debated were given the opportunity to do so.

"Their additional inputs were heard and taken into account," the Finance Minister emphasised. She also credited states for their constructive participation in the GST Council and their commitment to driving tax reform.