Nirmala Sitharaman Denies Trump Tariff Link To GST Overhaul, Says Reforms Were In Pipeline For 1.5 Years

Finance Minister Nirmala Sitharaman has rejected claims that India’s latest Goods and Services Tax (GST) reforms were triggered by US President Donald Trump’s tariff war.

Speaking to India Today, she said, "We have been working on GST overhaul for over 1.5 years. It is not because of Trump's tariffs.”

Her remarks came after Opposition leaders, including former finance minister P Chidambaram, questioned the timing of the reform.

Chidambaram suggested that alleged sluggish economic growth, rising household debt, declining savings, upcoming Bihar elections, and Trump’s steep tariffs on Indian goods could have prompted the move.

Sitharaman dismissed such speculation and accused the Opposition of being misinformed about GST.

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She argued that the original GST rates were not arbitrarily set by the government but inherited from the pre-GST tax system. 

She also reminded critics that earlier governments had failed to implement GST despite decades of discussions, citing a lack of trust among states over compensation and execution.

In the latest reforms cleared in the 56th GST Council meeting, the government has abolished the 12 per cent and 28 per cent slabs, moving to a simplified two-tier structure of 5 per cent and 18 per cent, along with a new 40 per cent slab for luxury and sin goods.

Tobacco and cigarettes will continue to attract 28 per cent GST plus compensation cess until loans taken for state compensation are repaid.

The new structure will come into effect from 22 September, coinciding with the start of Navaratri.

The government has projected that the rationalisation will reduce compliance complexity, boost consumption, and widen the tax base.

With the debate intensifying, the GST reforms are being positioned as one of the most significant tax resets since the system was introduced in 2017.

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