GST 2.0 was in the works for about 8 months: Sitharaman says PM Modi wanted it simplified

Finance Minister Nirmala Sitharaman has revealed that GST 2.0 had been in the works for nearly eight months after Prime Minister Narendra Modi personally called for a simplified tax regime. Speaking to CNN-News18 Editor-in-Chief Rahul Joshi, she said the revamped system was designed not only to ease compliance and rationalise slabs but also to ensure that everyday citizens feel the benefits through lower prices and greater spending power.

Prime minister’s push for simplification

“The prime minister announced it from the Red Fort. Eight months ago, he called me and asked how the GST should be revamped,” Sitharaman revealed. “Both from the point of view of the process and also for the common man for tax rates, is there a way to make it simpler?”

Centre takes the lead for the first time

The finance minister emphasised that the exercise was deeply consultative, involving state finance ministers and guided by a vision of inclusivity. “I thank every finance minister who attended the State Finance Ministers’ meeting,” she said, noting that the Centre played an unusually proactive role this time. “This is the first time that both the issue of compensation cess and a comprehensive proposal on GST have been taken up by the Centre.”

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According to Sitharaman, GST touches the lives of every citizen and therefore needed to be handled with sensitivity. “This tax is something that touches life of every citizen, so it’s sensitive—hence we had to be sharp. For the first time in eight years, the Centre drew up the proposal,” she said.

Relieving the middle class and farmers

The reforms focus heavily on regrouping items under GST to ease the burden on key sections of society. “I had to look at different income brackets. Every item which comes under GST—goods or services—had to be looked at, regrouped as daily-use items, and then see those which are going to hit farmers, the middle class, and so on,” Sitharaman explained.

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Tackling litigation and classification woes

Highlighting one of the major irritants in the earlier regime, she pointed to the confusion over classification. “The new GST regime will address the problem of classification. Changes previously led to a lot of litigation, with states losing revenue. GST in 2017 was an improvement over what was earlier, and it still needed some more simplification. For me, it was a fascinating exercise, but I think this was absolutely rewarding.”

Boosting consumption during the festive season

The finance minister underlined the reform’s impact on consumption, stressing that it would directly empower citizens. “The needle on consumption will move 100 per cent. Citizens now have a choice to spend money. Prices of everything have come down. This will definitely increase what people spend,” she said.

By ensuring more disposable income for households and reducing barriers for small businesses, Sitharaman believes GST 2.0 will play a catalytic role in boosting domestic demand, particularly during the festive season.