New Delhi: Finance Minister Arun Jaitley on Thursday asked industry to look into the existing incidence of indirect tax before seeking reduction in Goods and Services Tax rates as proposed by the GST Council.
He further said that industry should gear itself for GST, which the government proposes to roll out from July 1.
"We are passing through a stage where the government is ahead of the industry. I will expect that the industry, or those sections which say they are not ready, should also fall in line because we are quite clear about the date," Jaitley told reporters.
As regards industry raising concerns over fitment of certain commodities, Jaitley said the GST Council follows certain mechanism before deciding on the rates.
"The officials discuss the existing rates, they try and fit in commodities to the extent possible into the existing rates and then the Council takes up the matter for consideration and finally approves it. It is the Council which takes the decision," he said.
The GST Council, comprising Jaitley and his state counterparts, had last month fitted over 1,200 goods and 500 services in the tax bracket of 5, 12, 18 and 28 percent. Some sections of the industry, including auto and FMCG, has been seeking a rate reduction.
Jaitley said:"Using media propaganda for making the rates vary will not make any significant impact on the decision of the Council."
When asked about high 28 percent tax rate on the entertainment industry, Jaitley said in several states the existing incidence of entertainment tax is 100 percent, where as in the GST regime after paying 28 percent tax rate input tax credit can be availed.
As regards industry approaching media with their woes, he asked them to first study the tax rates.
Chief Economic Advisor Arvind Subramanian expressed confidence that implementation of GST will boost GDP growth.
"Incidence of tax is going to come down, so it will both reduce prices and increase consumption... We expect implementation challenges to GST, but the economic effects of tax structure will be positive for both reduce inflation and increase consumption," Subramanian said.
The government plans to implement the GST, which will unify 16 different levies, from July 1. The GST Council will meet on June 3 to decide on tax rates for six goods and will also clear pending rules for the new indirect tax regime.
"GST is in its last leg of implementation. Once implemented, it will bring improvement in the taxation system," Jaitley said.