Jaitley: No surprises in rate fixation under GST

Tribune News Service

New Delhi, April 28

Finance Minister Arun Jaitley today said the tax rates under the Goods and Services tax (GST) regime will not be very different from the current rates and asked industry to pass on the benefits of lower taxes to consumers.

Speaking at the CII’s annual session, Jaitley said that GST, a path-breaking reform, is closer to implementation as the rules and regulations are in place and the formula for commodity-based taxation is known.

“We are now in final stages of fixing tariffs for different commodities. The formula under which it is being done has also been explained and therefore nobody is going to be taken by surprise, it’s not going to be very significantly different (from present),” he said. The Finance Minister said the simplification of direct and indirect taxation is aimed at making India a tax compliant society.

The GST Council has finalised four rate categories of 5, 12, 18 and 28% after unifying levies like central excise, service tax and VAT.

Fitment will be done by adding the total incidence of current taxation (central plus state levies) and then putting the good or service in the tax bracket closest to it.

The Finance Minister said industry should pass on the benefits of lower taxes to customers. The Finance Minister said the GST Council is of the opinion that any benefit accruing from lower tax rates under GST should be passed on to consumers.

“Profit or profiteering is not a bad word but unfair enrichment is. And therefore the benefit of reduction in taxation is a benefit that consumers are entitled to. And that’s not a principle that can be seriously contested,” he said.

Stressing the need to improve the manufacturing sector, Jaitley said while India’s capability to deliver on services to the world is without question, this should be extended to improve our manufacturing capabilities as well.

In this context, the government is committed to ensuring that India emerges as a hub of global manufacturing, he said.

Jaitley said augmenting investment in infrastructure and an identified rural focus would emerge as the primary growth drivers of the economy.

Arguing for a more competitive exchange rate, Chief Economic Adviser Arvind Subramanian said foreign exchange competitiveness was critical for growth and called for a rupee exchange rate that would promote exports.

Championing the cause of competitive exchange rates, he said this factor was a very “important instrument to maintain competitiveness and boost growth.” Subramanian said the strong exchange rates over the past two years were hugely impacting exports and he stressed that it was a misguided notion that strong currency rates were identical to national growth and economic strength. He said India Inc should be more vocal on exchange rate issues.