Prime Minister Narendra Modi said his government does not intend to introduce a single tax rate under the Goods and Services Tax. He said the Congress’ demand for a uniform 18% tax rate would lead to an increase in food and essential items’ taxation. Sunday marks a year since the the indirect tax regime was implemented.
“It would have been very simple to have just one slab but it would have meant we could not have food items at zero percent tax rate,” Modi said in an interview to Swarajya magazine published on Sunday. “Can we have milk and Mercedes at the same rate? So, when our friends in Congress say that they will have just one GST rate, they are effectively saying they will tax food items and commodities, which are currently at zero or 5%, at 18%.”
Modi said a total of 48 lakh new enterprises have been registered since the launch of the GST last year, against 66 lakh indirect taxpayers registered since Independence. Around 350 crore invoices were processed and 11 crore returns were filed.
“GST was a massive change, requiring a complete reset of one of the world’s largest economic systems...There are often teething troubles seen when a reform of this magnitude is carried out, but these issues were not only identified but also addressed in real time,” he said.
Modi sadi earlier many taxes were hidden, while under GST, “what you see is what you pay”. The indirect tax regime is an evolving system and feedback from traders and media have been incorporated, he said.
“GST has been designed to eliminate Inspector Raj with the help of information technology. From returns to refund everything happens online,” he added.
‘Idea of a single tax slab is flawed’: Jaitley
In a Facebook post on Sunday, Union Finance Minister Arun Jaitley too said that the idea of a single tax slab under GST was a flawed idea. “A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity,” Jaitley wrote. “Since GST is a regressive tax, the poor have to be given a substantial relief. Thus most food items – agricultural products and the Aam Aadmi used products have to be tax exempt. Some others have to be taxed at a nominal rate. The others could be taxed higher.”
He said once the tax collection start going up, ther could be scope to merge mid-category slabs. “But for that we have to see the progress of the new tax regime and the possible upward movement in the collections,” he added.