Chappal and Mercedes can’t be taxed at same rate: Jaitley on GST

New Delhi: As the implementation of one of the biggest tax reforms of recent history Goods and Service Tax (GST), completed two years on Monday, former Union Minister Arun  Jaitley called it both consumer and assessee friendly in his review report.

Jaitely explained how the transformation has proved "one of the smoothest" tax reforms. Jaitley also said that it was "politically safe", which was proved by the party's performance in Gujarat, a state that witnessed widespread protests over the GST.

"The BJP won all the Assembly seats in the Gujarat poll in Surat. In 2019, the BJP won the Surat seat by the highest margin in the country," he wrote in a blog titled "Two Years After GST".

Jaitley, who had been instrumental in introducing the "One Nation One Tax" as the finance minister chose to opt out from the second government on health grounds. Nirmala Sitharaman replaced him and would be presenting her first budget next week.

In the review, Jaitely presented numbers to show the benefit rendered through "One Nation One Tax" system.

"In the eight months of 2017-18 (July to March), the average revenue collected per month was Rs 89,700 crore per month. In the next year (2018-19), the monthly average has increased by about 10 percent to Rs 97,100 crore," wrote Jaitley.

Regarding the states' doubts about the future, he wrote: "Already after the second year, twenty States are independently showing more than a 14 percent increase in their revenues and the compensation fund in their case is not necessary".

Jaitley also attacked Congress that had been a strong critic of the implementation of the GST and multiple tax slab.
"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. It would be inequitable to apply a single rate in countries where there are a large number of people below the poverty line," Jaitley wrote.

The multiple tax slabs, he said, "not only checked inflation, but it also ensured that the Aam Aadmi products are not exorbitantly taxed. Illustratively, a Hawai chappal and a Mercedes car cannot be taxed at the same rate".

Jaitley also suggested that some rationalization is still needed and the process is already on.

"Except on luxury and sin goods, the 28 percent slab has almost been phased out. Zero and 5 percent slabs will always remain. As revenue increases further, it will give an opportunity to policymakers to possibly merge the 12 percent and 18 percent slab into one rate, thus, effectively making the GST a two-rate tax," he wrote.