GST proved to be consumer friendly, says Arun Jaitley on two years of rollout
New Delhi: As India completed two years of the roll-out of the Good and Services Tax (GST) on July 1, former finance minister Arun Jaitley on Monday stated the restructuring of one of the world’s clumsiest indirect tax system was not an easy task, mentioning the obstacles to implement the country’s biggest tax reform since Independence was compounded by “some outlandish and exaggerated comments of the not so well-informed”.
In a Facebook post on the second anniversary of GST roll out, Jaitley mentioned that the new tax regime “proved to be both consumer and assessee friendly.” The former finance minister emphasised that the high taxation of pre-GST era was a burden on the consumers’ pocket and acted as an impediment against tax compliance. Since the July 2017 implementation, GST rates were sharply slashed on many items.
Jaitley elaborated that the all-powerful GST Council in the last two years has slashed the tax burden on consumers as the tax collections improved, and most consumer goods have been brought in the 18 per cent, 12 per cent and even 5 per cent category. It is worth noting that this is Jaitley’s first blog after he opted out of Prime Minister Narendra Modi’s council of ministers in May this year.
“The Cinema tickets, earlier taxed at 35% to 110%, have been brought down to 12% and 18%. Most items of daily use are in the zero or 5% slab. The loss to the revenue on account of this reduction collectively has been more than Rs 90,000 crore annually,” Jaitley — the architect of the country’s biggest indirect tax reform — said in the post titled “Two Years After GST”.
Jaitley said in the last two years the assessee base has “increased by 84%”, highlighting the number of assessees covered by the GST were around 65 lakh and today, they are at 1.20 crores and it has led to higher revenue collections.
He further said that businesses upto an annual turnover of Rs 40 lakh are GST exempt and companies with a turnover upto Rs 1.5 crore can make use of the composition scheme and pay only 1% tax.
“Many warned us that it may not be politically safe to introduce the GST. In several countries, governments lost elections because of the GST. India had one of the smoothest transformation … … Those who argued for a single slab GST must realise that a single slab is possible only in extremely affluent countries where there are no poor people… ” Jaitley said.
Highlighting that India cannot have one single rate of GST, Jaitley said . ‘Hawai chappal’ and a ‘Mercedes car’ cannot be taxed at the same rate.
According to the former finance minister, “the GST merged all these seventeen different laws and created one single taxation. The pre-GST rate of taxation as a standard rate for VAT was 14.5%, excise at 12.5% and added with the CST and the cascading effect of tax on tax, the tax payable by the consumer was 31%”
Exuding confidence, Jaitley asserted that already after the second year, 20 states are independently showing over 14% jump in their revenues and the compensation fund in their case is not necessary.
