With several parties raising the issue of overall taxes increasing on certain commodities and there being too many slabs after the advent of GST, Finance Minister Arun Jaitley said Wednesday that with time GST rates could be rationalised. He said random criticism of GST rates was not fair as the rates had been decided by a council of experts and economists and not arrived at casually.

The minister was speaking in Lok Sabha during the discussion over two bills to extend GST to the state of Jammu and Kashmir. The Central Goods and Services Tax (Extension to Jammu and Kashmir) Bill and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Bill were passed by the House by a voice vote. Jaitley refuted suggestions by the Opposition, particularly the Congress, that the bills would infringe on the special status of Jammu and Kashmir. He said integration of J&K in GST would not only achieve the vision of the system but also help traders and consumers in the state.

“I am surprised that the Congress is making these arguments… In the state of J&K, this was an argument of the separatists. They have said that this would lead to greater integration of J&K with India… The special status of J&K was not meant to be an impediment in the economic development of the state,” Jaitley said. He added that if J&K did not get integrated with the GST system, everything would become expensive in the state as traders would not get any input credit. “So a consumer from the state would buy a car from Pathankot. Not only would he be inconvenienced but he would have also bypassed the local trader,” Jaitley said.

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On the question of some commodities attracting higher tax, Jaitley said, “As it [GST] moves forward, there would be scope for rationalisation. 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. But if you had done it immediately and had a single slab or a lesser slab, its inflationary effect would have been much higher. Therefore, we did not get into this exercise.”

In response to Congress MP Shashi Tharoor’s comment that GST had too many slabs and thus was not one nation, one tax, Jaitley said, “I agree that there are many slabs. But we can’t have less slabs and contain inflation too… If there was one slab then a BMW and a slipper would have the same tax… it would be against the poor. We have brought commodities consumed by the poor under zero tax.”

The BJD’s Tathagata Satpathy raised the issue of GST data being used unscrupulously as GSTN was in private hands. “Data is the new oil,” he said. Jaitley said that the government had 49% stake in GSTN and the rest was in responsible hands such as HDFC and LIC. He said the government would raise its stakes later to 51% and that it would be audited by the Comptroller and Auditor General. “No decision can be taken without the government (in GSTN). We are also keeping a close watch and whatever glitches may be there will be corrected,” he said.

The minister said that the GSTN structure had been prepared by the UPA and despite pressure to change it, he stuck to it as it was the correct structure. The minister also sought to clear the air over the controversy over higher tax on sanitary napkins. “Sanitary napkins were earlier taxed at 13.8%. We brought it down to 12%. Since all input costs are taxed at between 12-18%, the input credits will bring the prices down. Self-help groups in villages which make them are not taxed.”

The Congress’s Adhir Ranjan Chowdhury said that GST on dry fruits must be brought down from current 5% or else there would be illicit trade across the LoC. Earlier, Tharoor said that extending GST to J&K has “serious impact” as it alters the taxation power of the state. By “impinging” on the state’s right, he said, the Centre is violating the Constitution.

“J&K must be approached with sensitivity, but no sensitivity was shown as the bill was passed in assembly when Opposition was not present… It could signal future problems,” Tharoor said. GST, which replaced more than a dozen central and state levies, came into effect from July 1 in other states; the J&K assembly passed a resolution adopting it on July 5.

Thereafter, the president issued an ordinance extending the provisions to the state. This was necessary because of the special status that Jammu and Kashmir enjoys under the Constitution.

 

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Source: Indian Express