Chennai: The next generation GST reforms would ‘absolutely’ set an economy open and transparent with further reduction in compliance burden and benefiting small businesses, Union Finance Minister Nirmala Sitharaman said on Tuesday during the 120th Foundation Day celebrations of Tamil Nadu-based City Union Bank.
Sitharaman said Prime Minister Narendra Modi recently announced the creation of a Task Force for next generation reforms with a clearer mandate to simplify regulations, lower compliance costs and also build a more enabling ecosystems for startups, Micro, Small and Medium enterprises and entrepreneurs.
In his Independence Day address, PM Modi announced big-ticket GST reforms and promised a Diwali bonanza for citizens.
Sitharaman further said that if India is advancing towards its vision of Viksit Bharat 2047 then the banks are called upon to not only expand credit but also provide momentum for infrastructure development, ensure timely and need-based funding for MSMEs, bringing the unbanked into the fold of formal banking and meeting diverse requirements where the support of banking channels was vital.
Over past 11 years, 56 crore Jan Dhan accounts have been opened with total deposits of Rs 2.68 lakh crore, and majority of the account holders were women, she added.
The finance minister also pointed out that Indian scheduled commercial banks (SCBs) have recorded massive improvement in asset quality. Credit rating agency S&P has upgraded the country’s long term sovereign credit rating for the first time in 18 years, she added.
She said that the Gross NPAs of the SCBs have come down to 2.3 per cent as of March 31, 2025 while net NPAs were at 0.5 per cent. “I would think, at a time which is so challenging as this, our banks to achieve this is phenomenon and all Indian banking sector members, families, employees, the Board will have to get our due recognition for the wonderful service they have done,” she said. As a result of the record massive improvement on the asset quality of SCBs, she said the aggregate capital levels of banks would continue to remain above the regulatory minimum even under these ‘adverse stress scenarios.’
“So, strong and well capitalised banks with a near record low NPAs mean cheaper, steadier credit for households, MSMEs and infrastructure, lower systemic risks and also sustained confidence in India’s financial system,” Sitharaman noted.
Observing that the guiding principles for banks to advance India towards Viksit Bharat 2047 is based on Trust, Technology and Transparency, she said, “trust is earned through consistent service of ethical conduct and sound governance. It is very important for the banks to earn and retain trust.”
Technology should be leveraged not only for efficiency of banks but also for inclusion and customer empowerment. Transparency should ensure that every Rupee carries not just an interest to banks but also intended to align with Nation building, she said.
Meanwhile, the Centre is likely to push for a 5 per cent tax on EVs when its ambitious overhaul of the Goods and Services Tax (GST) to lower tax rates on daily use items ranging from butter to electronics is considered by the all powerful GST Council in a two-day meeting starting Wednesday.
The Council, chaired by Union Finance Minister Nirmala Sitharaman, will discuss the Centre’s ‘next-gen’ GST reform proposal of having just two tax rates of 5 and 18 per cent by moving products from the current 12 and 28 per cent slab to lower rates. A special 40 per cent rate has been proposed to be levied on select few items.
While the pruning of the tax slabs and the resultant expected fall in prices have been welcomed, opposition ruled states are seeking compensation for any loss of the revenue that may occur because of the rejig.
The GoM has consented to Centre’s proposal of doing away with the 12 and 28 per cent slabs, and reducing tax rates to benefit common man. Its recommendations are to be considered by the Council on September 3 and 4.