Firms have to pass GST benefit to consumers, will keep watch: FM

Finance Minister Nirmala Sitharaman on Saturday said she would personally ensure that the rate cut benefit was passed on to consumers, warning she “will directly engage with companies that do not comply”. The new rates take effect on September 22.

Sitharaman highlighted that industry had so far shown a positive approach, with many companies, including car manufacturers and insurers, already announcing price cuts. “The government’s priority is to ensure these lower taxes translate into cheaper products and services for ordinary citizens,” she said.

On the Opposition’s criticism of the GST reforms, Sitharaman said, “India deserves a better Opposition. Such ill-informed commentary will do no good. The (Opposition) leaders are misleading the public and not serving the country. In fact, they are harming it.”

She minced no words in her takedown of the Congress for blaming the BJP-led NDA government for keeping four tax slabs when the GST was introduced and claiming vindication over the latest move to rationalise the structure by keeping only two slabs. It was not the BJP’s decision, Sitharaman said, adding Congress ministers, too, were part of it. “Are they (Opposition) not aware of it?”

“The Congress has now stirred into action. If you do not understand the issue, then the least you can do is keep quiet,” she said, reminding the party that it was an empowered committee of finance ministers from states that decided on keeping four slabs in the GST before it was rolled out.

Elaborating on the reforms, she said, “The scale of the reform is significant, affecting nearly 400 products. Essentials like soaps and shampoos will be taxed at a lower 5 per cent, while staples like milk and bread remain zero-rated. The previous 12 per cent and 28 per cent slabs have been scrapped, leaving a simpler two-tier structure of 5 per cent and 18 per cent. A new 40 per cent slab is reserved for ultra-luxury and sin goods.”

Calling it a “people’s reform,” Sitharaman said the measure would reduce household costs and encourage spending, affecting every family. She argued it would start a “virtuous cycle” by boosting consumption, supporting growth and easing inflation.

“The overhaul also simplifies the system for small businesses, with faster registration and refunds. It addresses previous classification disputes. For example, all salted popcorn will now be uniformly taxed at 5 per cent,” she said.

Sitharaman compared the logic to recent income tax relief, saying the GST changes would allow that money to stretch further for consumers. She also expressed confidence that inflationary pressures were under control and that these cuts would provide further relief.

As the new structure begins, the minister reiterated that vigilance would be key to ensuring the benefit reached everyone.