GST cut to boost growth, offset US tariff hit; India to keep buying Russian oil, says FM Sitharaman

New Delhi: Finance Minister Nirmala Sitharaman on Friday said the GST rate cut would spur economic growth and offset the drag caused by the US tariff hike on Indian exports. She also added that India would continue purchasing Russian oil due to economic considerations, as crude remains the costliest item in the country’s import bill.

The government’s immediate focus, she said, would be on ensuring that the GST rate cuts on various goods and services, effective from September 22, are passed on to consumers. “We have a lot of work post-22nd September. It is a big vigilance exercise and we are confident the benefits will reach the common man," Sitharaman said.

The Finance Minister noted that the government was speaking to different stakeholders and industry leaders to ensure the reduced rates are reflected in market prices. “After the GST Council's decision to cut GST rates, MPs are also taking up the responsibility of monitoring the rate reduction on the ground,” she added.

On western pressure over India’s continued oil imports from Russia, Sitharaman said purchases would remain guided by economic factors such as price and logistics. “Since oil is a big-ticket foreign exchange-related item and the costliest in India’s import bill, we will undoubtedly be buying Russian oil," she said.

Addressing concerns about the USA’s 50 per cent punitive tariff on Indian exports, the Finance Minister said that the cut in GST rates would drive domestic demand and spur growth, thereby cushioning the adverse impact. She also said the government would roll out measures to support sectors hit by the tariff hike.

The new two-slab GST system of 5 per cent and 18 per cent, replacing the earlier four slabs of 5, 12, 18 and 28 per cent, is expected to lower the prices of most goods and services. At the same time, a 40 per cent tax on luxury and sin goods such as pan masala, tobacco, aerated drinks, high-end cars, yachts and private aircraft will ensure revenue balance and fairness.

Alongside, compliance has been simplified with faster refunds, easier registration and return filing, and reduced costs, particularly benefiting MSMEs and startups.

Sitharaman revealed that Prime Minister Narendra Modi had asked her eight months ago to explore a revamp of the GST framework, with a strong focus on easing the burden for the middle class. “GST 2.0 has been designed to minimise disputes and ensure clarity for both businesses and states,” she added.
(With IANS inputs)