HT Business: July 27, 2018
The continuous revision of Goods and Services Tax (GST) rates with reduction for 384 commodities and no tax hike on any product has been the largest mass tax reduction since independence, Union minister Arun Jaitley wrote in a Facebook post on Friday.
“If the entire category of all the slabs is taken, the past one year has seen reduction of tax in 384 commodities with no increase on a single product. India has never witnessed such mass tax reduction since Independence. Lesser rates and higher collection is the result,” wrote Jaitley.
He exuded confidence that GST rates on cement, air conditioners and televisions will be cut as tax revenues increase, and only luxury and sin goods will attract the highest slab of 28%. He mentioned that tax rates had also been cut on 68 different categories of services.
Criticising the pre-GST indirect tax regime with multiple central and state levies often with a cascading effect, Jaitley called it that ‘Congress Legacy Tax’. “Hopefully, with further expansion of revenues, these few items may also witness a change of category. Thus within a record period of 13 months, the GST council has almost phased out the 28% category. It is only a matter of time that the final obituary of the ‘Congress Legacy Tax’ is written. Only the luxury-sin tax would remain,” he said.
When the GST rates were first fixed, uncertainty about revenue collection led to higher taxes being fixed, said former chief statistician of India Pronab Sen.
“But the rollout showed the need to reduce these taxes since they were indeed high, so is that not a goof-up? What this government can rightly take credit for is in the successful implementation of GST, which was pending for years,” he added.
GST, which subsumed 17 local taxes, was rolled out on July 1, 2017 and Jaitley added that this reduction of tax rates and its impact on revenue collection will be entirely borne by the central government.
“The net revenue loss which Government have suffered on account of the reduction of tax on goods and services is about Rs 70,000 crore. Since State Governments have been guaranteed a 14% increase over their pre-GST revenues for the first five years, this burden has entirely been borne from the share of the Central Government,” Jaitley said.
Hailing the GST reduction on 15 items on July 21 as a significant economic reform, Jaitley said that this will spur consumption as it reduces the cost to consumers. Jaitley referred to the amendment to the Prevention of Corruption Act as the second economic reform in the last week, saying that will it ensure that honest officers will not be harassed by investigative agencies in the process of booking the corrupt.
The minister said that the 30-year old anti-corruption law, which was enacted in pre-liberalisation regime, had not anticipated the kind of risk which could be faced by honest decision makers.
“Thus a loan given by an honest bank management in accordance with the rules, would get subsequently questioned if the recipient of the loan defaulted and the entire process of the banker-lender relationship was referred to an investigative agency,” he said.
Jaitley said the only group which is unhappy with the amendment are the NGOs, who are not aware of the needs of governance, quick decision-making and growth.
The Congress retorted by saying the amendments had been pending since 2013.
“Mr. Jaitley is shedding crocodile tears for bureaucrats as the amendments were pending since 2013. He has become an expert on giving opinions through Facebook and he has been forced to write this blog to deviate attention from the mega bank scam that surfaced recently in Pune,” Congress leader Jaiveer Shergill said.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.