Lagatar24 Desk
New Delhi: The landmark rationalisation of Goods and Services Tax (GST), eight years after its introduction, was achieved with rare unanimity among Centre and states — including those ruled by the Opposition. The GST Council, which met at Vigyan Bhavan, approved a simplified two-rate structure of 5% and 18%, with a special 40% slab for luxury items like high-end cars, tobacco, and cigarettes. The new rates will apply from September 22.
PM Modi’s Push for Relief to Middle Class
The reform push came directly from Prime Minister Narendra Modi, who in his Independence Day address urged big relief for the middle class. Finance minister Nirmala Sitharaman later revealed that the PM had been pressing the finance ministry for nearly eight months to finalise GST reforms, balancing relief to citizens with state revenue concerns.
Groundwork Before the Council Meeting
Sitharaman and her team had already held multiple rounds of consultations with states over six months, preparing the ground for consensus. The main sticking point was opposition-ruled states’ fear of revenue loss. Bengal, Punjab, Kerala, and Karnataka were initially hesitant, with Bengal and Kerala being the most vocal in their objections.
Marathon Negotiations and Last-Minute Breakthrough
The two-day meeting, scheduled to end by 7 PM, dragged until 9:30 PM as discussions intensified. Punjab and Bengal softened their stance earlier in the day, with CM Mamata Banerjee even pointing out that some of the changes reflected proposals she had made years ago. Karnataka and Kerala, however, remained firm until the last moment, demanding concrete assurances of compensation for potential revenue loss.
When Chhattisgarh finance minister OP Chaudhary suggested moving to a vote — rare for GST Council decisions, which are usually by consensus — it created further pressure. At this point, Bengal intervened and played a mediating role, persuading Karnataka and Kerala to agree. The consensus was sealed late in the evening.
Finance Minister’s Assurance
Sitharaman assured states that GST collections belong equally to the Centre and states. She emphasised that if states suffered revenue shortfalls, so would the Centre. The collective priority, she said, had to be relief for the common man and economic momentum through consumption.
