GST: ‘Knee-jerk reaction’, rates should’ve been lower from July 1, several state FMs say

Finance minister Arun Jaitley said that the GST Council will discuss inclusion of real estate in the indirect tax regime in the next meeting, which is likely to be held in January.

By: ENS Economic Bureau | Guwahati | Updated: November 11, 2017 4:55 am
GST rates, GST council, state finance minister, Goods and Services Tax, new GST rates, GST rates slashed, tax slab, finance news, Indian Express The GST Council is set to review the GST returns filing cycle and make it taxpayer friendly.

Even as GST Council announced a slew of measures including goods and services tax reduction for 178 items in 28 per cent tax slab, some state finance ministers termed the decisions as “knee-jerk” reaction and said that the rates should have been lower from July 1 itself. Some other ministers, however, said that there’s a case for lowering rates in the coming days as well.

Punjab finance minister Manpreet Singh Badal said many flaws remain in the GST regime. “Cement paints and white goods are still in 28 per cent category. The government has realised these things after 5 months, they didn’t realise it earlier so we are not actually satisfied with today’s meeting. Many flaws still remain…there is still not complete satisfaction on it. It’s important to follow some principles rather than have knee-jerk reactions,” Badal said.

Bihar’s finance minister Sushil Kumar Modi said there’s a case for lowering rates in the coming days as well. “The decision taken by GST Council will have a revenue implication of Rs 20,000 crore and there is consensus that slowly 28 per cent slab be brought to 18 per cent. It will take some time because it has a big revenue implication. Four months are left for the fiscal to end, so the revenues should stabilise and in the coming days, there’s case for lowering of rates,” Modi said.

Read | Only 50 items left in highest GST slab, list slashed three-quarters to ease tax burden

West Bengal’s finance minister Amit Mitra said that revenue losses over the last three months have been phenomenal. “The tax losses in the last three months have been phenomenal. The aggregate loss is Rs 60,000 crore for the central government and Rs 30,000 crore of the states because we had said repeatedly that don’t launch it on July 1 but it was launched forcefully. Today you see the result. In three months, almost a lakh crore rupees was lost because of unpreparedness,” Mitra said.

Revenue secretary Hasmukh Adhia, however, said that those are not revenue losses but amount stuck as IGST credit. Earlier in the Council meeting on Friday, state finance ministers emphasised on the need to have quarterly returns, lesser items in 28 per cent tax slab and a simplified composition scheme and also said that this is the right time to include real estate, petrol, alcohol under the indirect tax regime.

Finance minister Arun Jaitley said that the GST Council will discuss inclusion of real estate in the indirect tax regime in the next meeting, which is likely to be held in January.

Delhi’s finance minister Manish Sisodia said tax rates should have been set lower from July 1 as higher rates encourage black marketing. “I have said that 28 per cent tax rate means you are encouraging black marketing.

Secondly there are some issues which need wide discussion like composition scheme. The scheme worked successfully in the VAT regime but if we try to extend it to SMEs then I think there’s a need to think separately about SMEs in GST structure. All these issues cannot be resolved through composition scheme,” he said.

Sisodia added that there is a need to bring real estate and alcohol under GST. “I have always said bring real estate in GST because if you put 28 per cent in construction activities and then suddenly it goes into a black hole because there’s no counting of where that is going…when you talk of one nation, one tax, then I think everything should be brought under GST. First bring real estate and liquor,” he said.

“Jis din liquor ko aap layenge, us din bade bade surmao ke liquor ke karobaar question mein aayenge (the day you include liquor under GST, many big businessmen would be under question),” he said.

Puducherry chief minister V Narayansamy said the cap for GST rate should be 18 per cent. He added that the current procedure adopted for filing returns is “cumbersome”. “Common man consumption goods especially daily use items are 28 per cent like construction industry, toiletries. Common man is affected, GST was brought to simplify procedures and to facilitate common people to purchase items,” he said.

Haryana finance minister Captain Abhimanyu said the meetings are not related to elections. “The meetings cannot be related to any election because GST Council is represented by states and Centre. Same spirit of unanimity should continue,” he said.

For all the latest Business News, download Indian Express App

    Live Cricket Scores & Results