Union finance minister Nirmala Sitharaman Thursday said there was no “friction” in the ties between the Centre and states over Goods and Services Tax and emphasised that the federal structure in this economic reform should be respected.
“I completely deny that there’s a lot of friction in the GST relationship with states,” Sitharaman said at ‘The Finance Minister’s Insight: Path Forward’, held under the aegis of the Revenue Bar Association, in Chennai. “The Centre is not extracting revenue from states.”
She also said simplifying and easing compliance on the taxpayers received top priority rather than raising revenue during all consultative meetings on the union budget.
“Revenue is the last consideration with which every budget meeting happens. Yes, we like to raise revenue but during several consultations including those with PM Narendra Modi, revenue raising came last and simplifying, easing and compliance of taxpayers came first,” Sitharaman said.
She added that while people are talking about high GST, the average tax rate decreased to 12.2% as of 2023, which was much below the revenue neutral rate (RNR), originally suggested at 15.3% The FM said the structure in the GST framework has to be respected so that both the Centre and states could work together to promote developmental activities besides widening the tax base.
