Jaitley indicates scope for rationalisation of GST rates

New Delhi: Finance Minister Arun Jaitley on Wednesday 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 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 was later passed by a voice vote.

Jaitley also said that he was under pressure to change the GST Network which people said was faulty but felt the structure was correct.

He said technically GSTN is not a government company but its board has government majority and therefore, no decision can be taken without the consent of the government nominee. The company is also open to audit by the CAG.

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 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 per cent 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.

Earlier, participating in the discussion on the two bills, Jayadev Galla (TDP) made a plea to the finance minister that five per cent GST imposed on red chilli should be brought down to zero. He also urged the minister to remove GST on non-processed products and naturally processed products.

Malaysia, he said, went for anti-profiteering legislation at the time of GST and "we should also consider it."

M Rajamohan Reddy (YSR Congress) said the textile industry had been badly hit after GST and that the sector should be removed from indirect tax regime, else it would make the sector uncompetitive. He also stressed that there should be right coordination between Centre and states for proper implementation of GST.