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Nirmala Sitharaman: GST Reform Plans Took 18 Months To Shape
New Delhi: The recent reduction and rationalisation of Goods and Services Tax (GST) slabs — bringing them down to two and exempting certain categories, including health and life insurance premiums — had been under discussion for nearly 18 months, Union Finance Minister Nirmala Sitharaman said at an NDTV summit on Tuesday.
Sitharaman stressed that the reforms were not a reaction to the 50 per cent tariffs announced by former US President Donald Trump, which had sparked speculation that GST changes were aimed at boosting domestic demand to offset a potential USD 48 billion export hit.
According to the Finance Minister, deliberations on GST revisions began even before last year’s Union Budget, when Prime Minister Narendra Modi reminded her to focus on relief for the ‘aam aadmi’. At the time, she had presented her eighth consecutive budget, which included income tax rebates for salaried taxpayers earning up to ₹12 lakh.
“It took time to prepare a worthy package of proposals for the Prime Minister,” she said, noting that she formally approached him with the GST plan only in May this year.
The next hurdle was getting states on board. A crucial GST Council meeting was scheduled for September 3–4, where several states were expected to push back over possible revenue losses and demand compensation, including a fresh ‘sin tax’. However, Sitharaman said the meeting ended in a single day with a unanimous consensus.
“To be fair to state finance ministers, they were supportive of rate rationalisation,” she said.
The Finance Minister also underlined that states have not received compensation since 2022, referring to the GST Compensation Cess. Previously, collections under this cess were redistributed to states and Union Territories to offset revenue losses from the GST regime.
“Currently, the cess is being used to repay loans taken by states and UTs during Covid,” Sitharaman explained. She added that the more sustainable solution lies in improving tax collection efficiency rather than depending on payouts from the Centre.
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The BSE Sensex is trading higher by 371 points, or 0.47%, at 81,090.24, while the NSE Nifty rises by 70 points to trade above 24,850 at 24,889.25.
Stock Market Today.
Market Updates Today: A day after the market crash following the Budget’s provision to hike Securities Transaction Tax (STT), the domestic equity market on Monday saw heightened volatility. After opening nearly flat, the NSE Nifty rose to the day’s high, then touched the day’s low before sharply recovering to trade at the day’s high of 25,093.
As of 3:16 pm, the BSE Sensex surged by 932 points, or up 1.13%, to 81,641.87 in the afternoon trade and the NSE Nifty rose by 267 points, or up 1.07%, to trade above 25,000 at 25,093.27. After opening nearly flat, the NSE Nifty rose to the day’s high, then touched the day’s low before sharply recovering to trade at the day’s high of 25,093.27.
Among the 30 Sensex shares, 25 stocks were trading in the green. Among the top gainers were PowerGrid, Adani Ports, BEL, Reliance, Mahindra & Mahindra, Larsen & Toubro, and IndiGo, rising by up to 7.91%. The laggards were Axis Bank, Infosys, Titan, TCS, and Trent, falling by up to 1.97%.
After opening nearly flat, at around 9:30 am, the BSE Sensex jumped by 350 points to 81,112.03 in the opening trade, while the NSE Nifty rose 91 points to trade above the 24,900 level at 24,910.85. However, the benchmarks gave up all gains and declined to day’s low amid heavy volatility.
Aakash Shah, technical research analyst at Choice Equity Broking Private Ltd, said, “Near-term sentiment remains cautious despite some support from domestic technical indicators. The broader market direction will largely be influenced by global equity cues, crude oil price movements, and institutional fund flows.”
On Sunday, the Nifty saw an aggressive sell-off after the Budget 2026 announcement to hike STT, plunging nearly 870 points from 25,440 to an intraday low of 24,571, before staging a partial recovery to close at 24,825.
“A strong bearish candle was formed, with the index closing decisively below the 200-day EMA, indicating a deterioration in trend strength. Immediate resistance is placed at 24,950–25,000, while key support lies in the 24,650-24,700 zone. The RSI slipped to 31, reflecting oversold conditions, while India VIX surged 10.73% to 15.09, highlighting elevated market volatility,” Shah said.
On Sunday, February 1, foreign institutional investors (FIIs) sold equities worth Rs 588 crore, while domestic institutional investors (DIIs) also remained net sellers, offloading shares worth Rs 682 crore, adding to the pressure on the market.
V K Vijayakumar, chief investment strategist at Geojit Investments Ltd, said, “Yesterday’s market selloff resulting in 495 point crash in Nifty was a knee-jerk reaction to the sharp increase in STT on F&O trades. This was not a revenue-raising measure, but a decision to discourage retail traders from complex F&O trading, in which 92% of them were losing money. This decision is in the interest of retail investors. But this decision impacted the market sentiments, which were already impacted by the decision to make no changes in the LTCGs tax, which a section of the market was expecting rather unrealistically.”
It is important to understand that the Budget is a growth-oriented Budget with fiscal prudence. The 10% nominal GDP growth projected in the Budget is achievable and has the potential to deliver around 15% earnings growth in FY27. The market will soon start discounting this positive. But it is possible that FIIs may continue to sell impacting the market. Retail investors should keep their cool and remain invested and continue to invest systematically. A significant upturn in the market may take time; perhaps a retreat from AI trade globally. We don’t know when this will happen. But we know that an earnings rebound is imminent in response to this growth oriented Budget. That is a clear positive, he added.
February 02, 2026, 09:34 IST
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