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  India   All India  25 Dec 2018  India working towards single GST rate: Arun Jaitley

India working towards single GST rate: Arun Jaitley

THE ASIAN AGE.
Published : Dec 25, 2018, 1:12 am IST
Updated : Dec 25, 2018, 1:12 am IST

The standard rate of VAT and excise was 14.5 per cent and 12.5 per cent respectively.

Finance Minister Arun Jaitley  (Photo: ANI)
 Finance Minister Arun Jaitley (Photo: ANI)

New Delhi: Finance minister Arun Jaitley hinted on Monday that India is working towards a single standard GST rate which could be a mid-point between 12 and 18 per cent, and that the government’s next priority is to transfer cement into a lower tax slab from the current 28 per cent.

“A future road map could well be to work towards a single standard rate instead of two standard rates of 12 per cent and 18 per cent. It could be a rate at some mid-point between the two,” Mr Jaitley wrote in a blog.

 

The finance minister also said that the country should eventually have a GST which will have only slabs of zero, 5 per cent and standard rate (mid-point of 12 to 18 per cent) with luxury and sin goods as an exception, but added that such a scenario could materialise only when revenue from GST collection rises significantly.

The finance minister’s statement about simplifying the tax structure is a response to criticism from the Opposition Congress that the new indirect tax with four rates — 5 per cent, 12 per cent, 18 per cent and 28 per cent besides a list of exempted items and cess on certain products — was a complex tax system and that it should have been capped at 18 per cent. It also comes within days of the GST Council revising downwards the rates of 23 items, leaving only 28 items in the highest category of 28 per cent.

 

“Today, barring tobacco products, luxury vehicles, molasses, air-conditioners, aerated water, large TVs, and dish washers, all 28 items have been transferred from 28 per cent slab to 18 per cent and 12 per cent slab. Only cement and auto parts are items of common use which remain in 28 per cent slab… Our next priority will be to transfer cement into a lower slab. All other building materials have already been transferred from 28 per cent to 18 and 12 per cent. The sun is setting on the 28 per cent slab,” Mr Jaitley added.

Mr Jaitley added that the Congress’ legacy of indirect tax was a 31 per cent tax. “We transiently put them in the 28 per cent slab. As the revenues kept increasing, we  started bringing down the rates. Most of the commodities have seen tax reduced,” said finance minister.

 

He said that of the 1,216 commodities which are used, broadly 183 are taxed at zero rate, 308 at 5 per cent, 178 at 12 per cent and 517 at 18 per cent.

Mr Jaitley pointed out that restaurants are being levied a tax compounded under the composition of turnover at 5 per cent.

“Assessees with turnover upto Rs 20 lakhs are exempted from tax payment. Assessees upto Rs 1 crore turnover can get a composition by paying 1 per cent tax. The composition scheme for small service tax assessees is under consideration. Cinema tickets tax between 35 per cent to 110 per cent has been brought down to 12 per cent and 18 per cent,” said Mr Jaitley.  

 

Mr Jaitley said that before GST, India had the worst indirect tax system anywhere in the world.

“The rate of taxation were exorbitantly high. The standard rate of VAT and excise was 14.5 per cent and 12.5 per cent respectively. To this could be added the CST and the cascading effect of tax on tax. The standard rate thus became 31 per cent on a large number of commodities,” the finance minister said and added that assessees had only two options — either to pay a high rate of tax or evade it.

He said that GST has helped in controlling inflation and evasion has also come down.

Tags: arun jaitley, gst, opposition, gst council