Prime Minister Narendra Modi today ruled out a single tax rate under the GST, saying Mercedes car and milk cannot be taxed at the same rate and accepting Congress party’s demand for a uniform 18 per cent rate would lead to a spike in food and essential items’ taxation.
Modi said the Goods and Services Tax has within one year of its launch led to over 70 per cent jump in indirect taxpayer base, demolished check-posts and merged 17 taxes and 23 cesses into one single tax.
The new tax regime, which subsumed central levies like excise duty and service tax and state taxes like VAT, is aimed at making indirect taxation “simple” while eliminating the Inspector Raj, he said, adding the GST is an evolving system which is calibrated based on feedback from state governments, trades and other stakeholders.
“It would have been very simple to have just one slab but it would have meant we could not have food items at zero per cent tax rate. Can we have milk and Mercedes at the same rate?
“So, when our friends in Congress say that they will have just one GST rate, they are effectively saying they will tax food items and commodities, which are currently at zero or 5 per cent, at 18 per cent,” he said in an interview to ‘Swarajya’ magazine.
Modi, according to a part-transcript of the 45-minute interview posted by Swarajya on its website, said against a total of 66 lakh indirect taxpayers registered since independence, 48 lakh new enterprises have registered since the launch of the GST on July 1, 2017.
“Around 350 crore invoices were processed and 11 crore returns were filed. Would we be looking at such numbers, if GST were indeed very complex?” he asked. “Check-posts across the country have been abolished and there are no more queues at state borders. Not only are truck drivers saving precious time but also the logistics sector is getting a boost and thereby increasing the productivity of our country. Would this be happening if GST was complex?”
To a query on criticism of GST implementation, he said the new tax regime was a massive change, requiring a complete reset of one of the world’s largest economic systems.