Jait­ley rules out sin­gle GST rate

Says ra­tio­nal­i­sa­tion of rates in the fu­ture de­pends on rev­enues

Business Standard - - FRONT PAGE - INDIVJAL DHASMANA

Fi­nance Min­is­ter Arun Jait­ley on Mon­day ruled out a sin­gle rate for the goods and ser­vices tax (GST), adding any fur­ther ra­tio­nal­i­sa­tion of tar­iffs would be con­tin­gent on rev­enues.

“Those who are speak­ing of a sin­gle rate for the GST have no un­der­stand­ing of the tar­iff struc­ture. Food items have to be taxed at nil. ‘Com­mon-man items’ have to be taxed at the low­est rate of 5 per cent,” he said.

Congress Vice-Pres­i­dent Rahul Gandhi had de­manded a sin­gle GST rate of up to 18 per cent against the cur­rent slabs of 0, 5, 12, 18, and 28 per cent.

“Lux­ury goods, sin prod­ucts, and prod­ucts haz­ardous to the en­vi­ron­ment and health can’t be taxed at the same rate as ‘com­mon-man prod­ucts’. Wheat, rice, sugar can’t be taxed at the rate as a Mercedes car or a yacht or to­bacco,” Jait­ley said.

He, how­ever, held out some hope for ra­tio­nal­is­ing rates. “In four months, we have ra­tio­nalised the 28 per cent slab. Such ra­tio­nal­i­sa­tion (in fu­ture) de­pends on rev­enue buoy­ancy,” Jait­ley said.

Last Fri­day, the GST Coun­cil low­ered the rates for al­most 210 items; 176 items were moved from 28 per cent to 18 per cent.

The fi­nance min­is­ter went on to enu­mer­ate the ben­e­fits of the GST. He said with a sin­gle rate per prod­uct across the coun­try, all in­ter-state bar­ri­ers had been re­moved and in­spec­tors had dis­ap­peared.

Jait­ley said the gov­ern­ment ex­pected the ben­e­fit of the lower rates to be passed on to cus­tomers, check­ing in­fla­tion.

THOSE WHO ARE SPEAK­ING OF A SIN­GLE RATE FOR THE GST HAVE NO UN­DER­STAND­ING OF THE TAR­IFF STRUC­TURE Arun Jait­ley, Fi­nance min­is­ter

The con­sumer price in­dex-based in­fla­tion rose to 3.58 per cent in Oc­to­ber from 3.28 per cent in Septem­ber. The rise was largely be­cause of food items but fuel and light — both largely out of the GST net — also con­trib­uted.

“This is an ad­van­tage of an ef­fi­cient tax sys­tem. Ra­tio­nal­i­sa­tion in the tran­si­tion will al­ways con­tinue. Wher­ever there is a scope for im­prove­ment and pro­ce­dural sim­pli­fi­ca­tion, it will al­ways con­tinue,” Jait­ley said.

Ex­plain­ing the ra­tio­nale for the ra­tio­nal­i­sa­tion in rates done af­ter the roll-out of the GST in July, Jait­ley said its main ob­jec­tive was mak­ing the tran­si­tion to the new in­di­rect tax regime smooth.

PTI said Jait­ley de­bunked the Congress’ claim that it had forced the gov­ern­ment to lower tax on over 200 goods, say­ing ra­tio­nal­i­sa­tion of rates was in the works for three-four months and it was “ju­ve­nile pol­i­tics” to link it to any elec­tion or po­lit­i­cal de­mand.

He added the GST Coun­cil de­cided on the rate cut af­ter the rec­om­men­da­tion of the fit­ment com­mit­tee. “It is a con­sen­sus de­ci­sion,” he added.

Congress has made high tax rates and in­creased com­pli­ance bur­den in the GST regime an elec­tion is­sue in the run-up to the As­sem­bly elec­tions in Gu­jarat. It has claimed credit for the ra­tio­nal­is­ing of the rates.

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