inance Minister Nirmala Sitharaman has clarified that the recent GST rate cuts were not influenced by tariffs imposed on India by former U.S. President Donald Trump. In an exclusive interview with Aaj Tak, she emphasized that the reforms were the result of 18 months of extensive deliberations by experts and the Group of Ministers (GoM), aimed at maximizing benefits for the public.
Long-Term Process, Not a Sudden Decision
Rejecting claims that the decision was linked to U.S. trade pressure, Sitharaman said:
“The reduction in GST rates is not connected to Trump’s tariffs. Work on this had been going on for over one and a half years. Each item was thoroughly discussed before lowering the rates. Such reforms cannot be done overnight.”
She explained that the GoM was set up 18 months ago to review GST structures. Initially chaired by a Karnataka minister, leadership later shifted to Bihar’s Deputy Chief Minister after a change of government in Karnataka. Over 300 items have seen rate reductions during this period.
Inflation Not the Trigger
When asked why GST reforms were announced now, despite inflation being at its lowest in July, the finance minister said that inflation trends cannot dictate tax reforms.
“Inflation is influenced by multiple factors, including supply disruptions, and it fluctuates. We cannot tie GST reforms to inflation levels. The focus was on easing the burden on the public, and for that, we held continuous discussions, item by item,” she said.
Big Relief for Consumers
The 56th GST Council meeting held on September 3, 2025, announced a landmark restructuring of India’s indirect tax system. Effective September 22, the country will move to a simplified two-slab structure (5% and 18%), replacing the previous multiple-tier system.
The government has branded this reform as “Minimum Tax, Maximum Savings” and the “Great Savings Tax”, highlighting its consumer-friendly approach.
Prime Minister Narendra Modi hailed the move, stating that the reforms will bring significant relief to households:
“From the upcoming Navratri, essential goods for millions of families will become cheaper. These reforms will not only improve living standards but also boost consumption and growth, while leaving more money in people’s pockets.”
