Union Finance Minister Nirmala Sitharaman said the recent Goods and Services Tax (GST) rate cuts have been successfully passed on to consumers, resulting in higher sales for key sectors like automobiles and electronics.
Speaking at a press conference with Union ministers Piyush Goyal and Ashwini Vaishnaw ahead of Diwali, Sitharaman said, “The government was closely monitoring 54 daily use items. We found that in every one of them, the tax benefit due to the GST reforms has been passed to the end consumer. The Prime Minister’s Diwali gift has been delivered.”
Dispute Resolution and Consumer Complaints
On the issue of grievances arising from GST cuts, Sitharaman noted that the government has streamlined resolution mechanisms. “Total number of cases which consumer affairs received is 3,169 around GST cuts, and 3,075 of them have been forwarded to CBIC nodal officers. The rest have been sorted out by consumer affairs themselves. Majority of complaints are related to a gap between the understanding of the GST cuts and what has actually been rolled out,” she said.
Sustained Demand Beyond the Festive Season
Sitharaman emphasized that GST reductions are not limited to festive discounts. “Tax reductions have not only happened for the festive season. These reductions mean more collections, so better fiscal room to give back something. Demand will sustain even after the festive season,” she said. Highlighting the broader economic impact, she added, “Won’t speculate on what growth I am expecting… but the environment after launch of GST 2.0 is clear in consumption trends, and consumption is one of the key engines for growth.”
Sector-wise Impact of GST Rate Cuts
The Finance Minister detailed the effects of GST cuts on different sectors:
Automobile sector: “Three-wheeler dispatches grew by 5.5 percent year-on-year to 84,077 units. Sales more than doubled for tractors. The sector has been vocal about GST rate cuts being passed, which has led to increased sales.”
Dairy and milk products: “All milk and milk-related items have reduced prices post-GST cuts. We are convinced rate reduction is reaching the consumers.”
Drugs and medical equipment: “We are closely monitoring these items to ensure GST cuts are passed on.”
High-end cement (PPC): Slight delay in passing on benefits noted, but the overall trend remains positive.
Since September 2022, Sitharaman said, monitoring 54 items has confirmed that in nearly all cases, the benefits of GST cuts have reached the consumer.
GST Reforms Not a Response to Global Tariff Wars
Addressing speculation about global trade tensions influencing GST reforms, Sitharaman clarified, “This has been in the works for one and a half years. Who had thought of any tariff war at that time? Several groups of ministers were working on this, and it was discussed at various levels. Now it has finally happened.”
With GST reforms now fully implemented and benefits reaching consumers across multiple sectors, the government aims to sustain the positive momentum in domestic consumption well beyond the festive season. Early signs of increased sales in automobiles, electronics, and essential goods indicate that the tax cuts are not only easing prices but also strengthening economic activity nationwide.
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