Scope to Club 12% & 18% GST Slabs Into One Later: Jaitley

Fi­nance min­is­ter said if the two rates had been merged into one, its in­fla­tion­ary ef­fect would have been high & thus govt didn’t get into this ex­er­cise

The Economic Times - - Economy: Macro, Micro & More - Our Bu­reau

New Delhi: Fi­nance min­is­ter Arun Jaitley on Wed­nes­day said there is scope to ra­tio­nalise goods and ser­vices tax (GST) and rolling 12% and 18% slabs into one as im­ple­men­ta­tion of the coun­try’s most com­pre­hen­sive in­di­rect tax re­forms pro­gresses.

“I do con­cede that as it (GST) moves for­ward, there will be scope for ra­tio­nal­is­ing the rates. There, prob­a­bly, will be scope that the two stan­dard rates of 12% and 18%, af­ter some time, could be clubbed into one. That is a fair pos­si­bil­ity and a sug­ges­tion,” Jaitley said re­ply­ing to de­bate on the two bills re­lated to GST in J&K.

Cen­tral Goods and Ser­vices Tax (Ex­ten­sion to Jammu and Kash­mir) Bill, 2017 and the In­te­grated Goods and Ser­vices Tax (Ex­ten­sion to Jammu and Kash­mir) Bill, 2017 were later passed by a voice vote. The cur­rent GST has 5%, 12%, 18% and 28% rates, plus one for lux­ury and sin goods. There are some that are zero rated, or nil rate.

Jaitley said if the two rates had been merged into one its in­fla­tion­ary ef­fect would have been high. “There­fore, we did not get into this ex­er­cise,” he said re­spond­ing to crit­i­cism over sev­eral slabs in the GST rates.

Jaitley said there can’t be a sin­gle slab in a coun­try like In­dia which has a large pop­u­la­tion be­low poverty line (BPL). As an ex­am­ple, he said a hawai chap­pal and a BMW car could not be taxed at the same rate.

The fi­nance min­is­ter also won­dered why cer­tain man­u­fac­tur­ers have hiked the prices of small hy­brid cars even though the duty has been re­duced. He added that a hy­brid car is priced higher and those who buy it can af­ford to pay a lit­tle more.

He said one of the GST ob­jec­tives is to as­sist do­mes­tic prod­ucts and the gov­ern­ment does not want to just al­low cheap for­eign prod­ucts to come in.

Jaitley said the pas­sage of the bills will en­sure greater eco­nomic in­te­gra­tion of the state with rest of the coun­try. He as­serted that special sta­tus of Jammu and Kash­mir was “never meant to cre­ate eco­nomic im­ped­i­ment” as he main­tained that the GST is in the larger in­ter­est of traders and con­sumers of J&K.

Jaitley said it was a pos­i­tive step that J&K has been in­te­grated with GST and the dream of one tax regime is now met, hit­ting out at the Congress party for its re­ported claim that GST would in­fringe upon the special sta­tus of J&K.

“If they (J&K) didn’t in­te­grate, the traders would not have got in­put credit and the tax on fi­nal prod­ucts would have been higher... That would have made prod­ucts costlier and con­sumers would have to pay more,” the min­is­ter said. “J&K is a con­sumer state and GST be­ing a des­ti­na­tion­based tax, rev­enues of the state would in­crease.” He added that if GST was not put in place in J&K, then cus­tomers would pre­fer to buy prod­ucts like cars and re­frig­er­a­tors from out­side the state.

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