GST 2.0 a 'system-cleaning reform', says Sitharaman

FINANCE MINISTER NIRMALA Sitharaman on Sunday said the next-generation Goods and Services Tax (GST) reforms introduced earlier this month have simplified the tax structure and resolved long-standing classification disputes that plagued the earlier GST regime.

- NARAYANAN V

Speaking at 'Tax Reforms for Rising Bharat', a conclave of trade and industry associations organised by the Chennai Citizens' Forum, Sitharaman highlighted that disputes over GST classification had often ended up in arbitration, with courts in different states offering inconsistent interpretations. "Business people didn't really understand the exact bracket under which an item fell," she noted.

She recalled that officials from Uttar Pradesh had pointed out in one of the previous GST Council meetings that items within a same food category are taxed at different rates. She cited the example of popcorn. "If popcorn is sold by a small street side hawker, it has no tax today and will have no tax tomorrow. But if it's packed and branded as namkeen, salted popcorn attracts 5% GST and caramel popcorn 18%. We explained this but it led to a lot of social media backlash then," she said.