Six months after calling it a flawed idea, Arun Jaitley has said that India is moving to a single standard rate of GST between 12-18%, now that the system is in place.
Around 6 months ago Finance Minister Mr Arun Jaitley had stated that the very idea of a single GST rate is flawed, in response to Congress President Rahul Gandhi’s criticism on the same. He had said in the tweet that a single GST rate was only possible in countries where the “entire population has a similar and a higher level of paying capacity”.
Six months later, Arun Jaitley has stated in a Facebook post that the GST regime in India could shift to a single standard rate. He insisted that the regime was now completely in place and the first stage of rationalisation had been done, in reference to the recent reduction of rates in many items from the 28% slab.
Around 225 items were in the 28% slab at one stage, and now the bracket only has around 30 items that are mostly sin and luxury goods. Speaking on cement and auto parts, the two items of common use which are still in the 28% bracket, Jaitley said that cement will be brought to a lower rate soon. He also mentioned how all other building materials have already been brought into the lower slab.
Responding to the opposition’s criticism on multiple slabs, Jaitley said, “Multiple slabs were fixed transiently in order to ensure the tax of no commodity goes up radically. This contained the inflation impact.”
Furthermore, India is missing on its GST revenue collection target of Rs 1 lakh crore every month, but Jaitley counters that this should be put in perspective. With the base year as FY 2016, every state has the target of increasing its revenue by at least 14%, which is nearly unachievable according to him. Still, six states have met the target and seven are close, leaving 18 states that are over 10% away.
Jaitley also dismissed the criticism of the Congress party, asserting how India had the worst indirect system with upto 17 levies in the Congress regime and the cascading effect of taxes going up to 31%.
The Congress has said that the government’s move to rationalise GST rates is ‘belated wisdom’, and Rahul Gandhi called it the ‘Gabbar Singh Tax’. Former finance minister Mr P Chidambaram has called the BJP model of 8 tax rates is a ‘stupid idea’ and has made filing of GST returns a ‘nightmare’. He added that there should be a standard rate as the Congress has been stating, along with a standard minus and a standard plus rate.