GST Changes Holistic, Coincidental Some Sectors Hit By Tariffs: Piyush Goyal

The rationalisation of Goods and Services Tax slabs - from four to two, and exemption of certain items, including premiums for health and life insurance - reflect a "holistic and well thought-out" decision of the government, Commerce Minister Piyush Goyal told NDTV Thursday evening.

Mr Goyal said the timing of the GST overhaul - the announcement was made by the GST Coucnil late Wednesday - had nothing to do with 50 per cent tariff, including a 25 per cent 'penalty' for buying Russian oil, imposed by Donald Trump, which is expected to affect nearly $48 billion in Indian exports.

He said the fact certain sectors - such as textiles, footwear, and food products, which export to the US and had been hardest hit by the tariff - could expect to benefit from the GST revision is "coincidental".

"This is a well thought-out and holistic new (tax) regime that has been brought in... it certainly could not have been done (overnight), to time it with a tariff imposed on August 27," he said.

"... when such a large number of changes are done to rates... rationalisation, simplification of procedures... it is a labor of love of many, many months. Officers and Groups of Ministers from states, the central government... everybody has worked on this," Mr Goyal said.

#NDTVExclusive | "Well thought out holistic new regime that has been brought in, certainly can't been done to time it with a tariff imposed on August 27": Commerce Minister Piyush Goyal (@piyushgoyal) to @vishnundtv on #GSTRefroms pic.twitter.com/QoR0CrVRm2

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The GST rationalisation has been seen by many as the government's measured response to Mr Trump's tariffs, an attempt to boost domestic demand by slashing taxes on a variety of daily use and aspirational goods and services and, consequently, also push the manufacturing sector.

Sources had earlier told NDTV the rationalisation is taking place now because the government has eight years of data (GST was introduced in 2017) and wants to use that information to make the system more efficient. The rationale for retaining only the five and 18 per cent slabs, sources also said, was simple - these two account for 74 per cent of total tax revenue collected so far.

The new GST slabs, Mr Goyal also said, will certainly boost the country's GDP, which clocked in at 7.8 per cent in Q1 of this financial year, i.e., FY2025/26. The estimate was 6.5 per cent.

"GDP growth has been consistently high. We have been able to bring inflation down to 1.55 per cent (i.e., retail inflation fell to an eight-year low in July) and, very clearly, this will have a very positive impact on GDP growth," the Commerce Minister said, noting the expected demand and manufacturing boost from the GST revision will make India a $30 trillion economy by 2047.