India not prepared for a single-rate GST system: FM Nirmala Sitharaman

Speaking at an event in Kolkata on Thursday, September 18, Union Finance Minister Nirmala Sitharaman said that while the government has moved to rationalise Goods and Services Tax (GST) slabs, the country is "not yet" prepared for a single-rate GST system, though it remains a possibility in the future.

She underlined that the four-rate GST structure of 5, 12, 18, and 28% was not arbitrarily fixed, but arrived at through a detailed exercise of aligning diverse state-level taxes with the nearest slabs.

"When a review of GST was undertaken, one of the needs identified was that they (GST Council members) didn't want four rates. However, the question of whether they were ready to get into one rate situation as yet was answered with not yet. Maybe sometime in future," Sitharaman said.

The FM described the ongoing reform process as part of “new generation GST reforms”, focused on making the system simpler and fairer, especially for the poor and middle class.

Recalling an initiative about eight months ago, she said Prime Minister Narendra Modi had asked her to “do something about GST” to strengthen what she termed one of India’s biggest achievements—the creation of a single national market by subsuming multiple central and state taxes and removing barriers like tolls and border posts.

Sitharaman also said documents comparing tax devolution between the present NDA government and the previous UPA regime had been circulated, along with details of projects in West Bengal.

She added that more documents would be shared soon, listing items of common use where GST rates have been reduced.