GST rates of 12% and 18% may be clubbed into one, indicates FM Jaitley

With regard to criticism over several slabs in the GST rates, Jaitley said there cannot be a single slab in a country like India which has a large population below poverty line.

New Delhi: Finance Minister Arun Jaitley has indicated that there could be scope for rationalisation of rates under the Goods and Services Tax (GST) as its implementation progresses.

He gave the indication in the Lok Sabha yesterday while replying to a debate on the Central Goods and Services Tax (Extension to Jammu and Kashmir) Bill, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Bill, 2017 which were later passed by a voice vote.

“I do concede that as it (GST) moves forward, there will be scope for rationalising the rates. There, probably, will be scope that the two standard rates of 12% and 18 percent, after some time, could be clubbed into one. That is a fair possibility and a suggestion,” Jaitley said.

Currently, GST has four tax slabs –5 percent, 12 percent, 18 percent and 28 percent. There is another rate for for luxury and sin goods while some have zero or nil rate.

With regard to criticism over several slabs in the GST rates, the finance minister said there cannot be a single slab in a country like India which has a large population below poverty line (BPL).

As an example, he said a chappal and a BMW car cannot have the same tax rate.

On the claims that after GST, disability aid will get costlier, he explained that while the different material used to manufacture a wheel chair may attract higher GST rates, the manufacturer can avail input credit for the final product which attracts 5 per cent tax.

He said if zero percent GST is levied on a wheel chair, it would become costlier as the manufacturer would then not be able to avail of the input credit at zero per cent.

The finance minister also wondered why certain manufacturers have hiked the prices of small hybrid cars even when the duty has been reduced.

He said one of the GST objectives is to aid and assist domestic products and the government does not want to just allow cheap foreign products to come in.

With PTI Inputs