Sitharaman chaired 3 separate review meetings on preparedness of GSTN for GST 2.0

New Delhi: Finance Minister Nirmala Sitharaman chaired three separate meetings to review the preparedness of the Goods and Services Tax Network (GSTN) for implementing the upcoming GST reform, which will slash the number of slabs and reduce rates to give a boost to consumption and growth.

Sitharaman said the Centre had begun preparatory work on upgrading GSTN’s backend much in advance to ensure a glitch-free transition. “It is only after making sure, just in case it gets passed. Because I wouldn’t know whether the Council will pass it or not. I asked, in case the Council approves this, will my GSTN system be ready? How long will you take?” she said.

In the most significant change since GST’s launch on July 1, 2017, the GST Council last week decided to reduce the slabs to just two from the current four. At present, GST is levied at 5, 12, 18 and 28 per cent, along with a compensation cess on luxury and sin goods. Starting September 22, GST will be charged at 5 and 18 per cent on most goods and services, with a separate 40 per cent rate on ultra-luxury items and tobacco-related products.

To execute this reform, GSTN’s software, which supports return filing and tax payments, must be upgraded. Businesses will also need to realign their ERP systems by September 22. “For this, three separate meetings were held in the ministry on how much time GSTN would take to prepare, and how long vendors will need to get their systems ready,” Sitharaman explained.

After extensive discussions, it was decided that the reform would be rolled out on September 22, the first day of Navaratri. “They (the systems) will be ready,” Sitharaman affirmed.

She expressed confidence that revenue buoyancy, driven by higher consumption, would offset the estimated Rs 48,000 crore GST shortfall arising from lower rates. “There will be no impact on public finances. On the contrary, GDP growth will be bolstered,” she said.

The Minister stressed that the consumption push from the reform, coupled with robust first-quarter GDP growth, could even help surpass the projected FY26 expansion of 6.3–6.8 per cent. Asked about the effect on fiscal deficit, Sitharaman clarified that the Rs 48,000 crore figure was a static estimate. “When it gets implemented, the base situation changes. The consumption spurt from September 22 will increase income buoyancy. To a large extent, this amount can be made up this year itself. So I don’t see any impact on fiscal deficit or fiscal management. I will stick to 4.4 per cent of GDP,” she asserted.

For 2025–26, the Centre has projected a fiscal deficit of 4.4 per cent of GDP, or Rs 15.69 lakh crore.

The GST Council, chaired by Sitharaman, had approved the two-tier structure of 5 and 18 per cent, with 40 per cent for sin goods. Nearly 400 products — from soaps to cars, shampoos to tractors and air conditioners — will become cheaper. Premiums on individual health and life insurance will be exempt from GST.

Under the new structure, most daily food and grocery items will fall under the 5 per cent slab, while essentials like bread, milk and paneer will attract no tax. Electric vehicles and small cars will be taxed at 5 per cent, and other white goods at 18 per cent, significantly lower than

current rates.