Prime Minister Narendra Modi and senior BJP leader Arun Jaitley, who as Finance Minister piloted the NDA government move to implement GST, on Sunday outright rejected the Congress suggestion that there could be single GST rate.
“It would have been very simple to have just one slab but it would have meant we could not have food items at zero per cent tax rate. Can we have milk and Mercedes at the same rate?,” Prime Minister Modi said in an interview to website and magazine ‘Swarajya’.
Mr Modi said “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 per cent, at 18 per cent.”
Union Minister Arun Jaitley also said that such an idea mooted by Mr Gandhi is “flawed”.
“Rahul Gandhi has been advocating a single slab GST for India. It is 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,” Mr Jaitley wrote in a blog piece.
Answering questions in his interview, Mr Modi listed out several benefits of the GST.
“In just one year after the introduction of GST, the number of new enterprises registered is 48 lakh,” he said adding since independence the national figure for the same was 66 lakh only.
“Around 350 crore invoices were processed and 11 crore returns were filed. Would we be looking at such numbers, if GST were indeed very complex?,” he said.
Prime Minister further said: “Check-posts across the country have been abolished and there are no more queues at state borders. Not only are truck drivers saving precious time but also the logistics sector is getting a boost”.
In his article, Mr Jaitley said Rahul Gandhi’s “fascination” by the Singapore model is “understandable but the population profile of a state like Singapore and India is very different”.
“Singapore can charge 7% GST on food and 7% on luxury goods. Will that model work for India? 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,” Mr Jaitley wrote.
Observing that there is always scope for improvement, he said key areas of future action will include more simplification and rationalising the rate structure.
He also did not rule out bringing more products into the GST. “I am confident that once revenue stabilises and the GST settles, the GST Council will look into these carefully and act judiciously.”
“Eventually, as the collections improve, many more items from the 28 per cent category can possibly come down. Only sin products and luxury goods can remain there. There would also be a scope again, depending on the collection going up, to merge some of the mid category slabs but for that we have to see the progress of the new tax regime,” Mr Jaitley added.