Centre concedes GST rate cut demand by Congress states

The Goods and Services Tax (GST) rate on 50 items of mass consumption, which were in the 28 per cent tax slab, has been slashed to the 18% slab on Friday at the meeting of the GST Council at Guawahati. The formal announcement was made by the Bihar Deputy Chief Minister Sushil Kumar Modi, who heads the Council’s panel for tackling IT-related glitches.

Former Finance Minister P Chidambaram had tweeted in the morning that Congress would force the changes at the meeting.

“All items of common consumption have been reduced from 28 per cent to 18 per cent tax rate,” he said, adding that almost 227 items were there in 28 per cent GST slab but now only 50 remain, which are mostly luxury items.

Since GST was rolled out, the tax slabs have been changed for over 100 items

“Tax on goods of mass consumption like chewing gum, chocolates, shaving items, shampoo, skin creams, whose revenue implication is not much, has been reduced,” Modi told reporters here on the sidelines of the 23rd meeting of GST council.

He further added that the revenue implication of these will be approximately ₹20,000 crore.

In a candid confession, a BJP minister in Madhya Pradesh Om Prakash Dhurve went on record to say that he didn’t understand GST. He was addressing a BJP event on demonetisation and GST. “Even big businessmen and top-notch CAs have not understood GST. So, I won’t say anything about it,” he remarked, evoking peals of laughter. “It’s a game of understanding. Once you start comprehending it, you will feel good, you will feel satisfied.”

In the run-up to the assembly elections in Gujarat and Himachal Pradesh, opposition Congress and its leaders have been targeting the government over difficulties faced by some businesses under the GST regime, with party vice-president Rahul Gandhi even calling it a ‘Gabbar-Singh Tax’.

Punjab Finance Minister Manpreet Singh Badal said his state wants rationalisation of tax rate, simplification of procedures and removing glitches in GST-Network.

The Congress, he said, was in favour of inclusion of petrol, diesel, natural gas, ATF and crude oil in the GST. The five products along with alcohol have been kept out of GST for now.

Modi said it was important for the system under the GST regime to stabilise as only four months remain of the current financial year.

The Congress-ruled states have been demanding rationalisation of GST rates to bring down the peak tax rate from current 28 per cent.

“Tax rates should have been set lower from July 1 itself and I have said that 28 per cent tax rate means you are encouraging black marketing,” said Delhi deputy chief minister Manish Sisodia.

The Congress-ruled states of Punjab and Karnataka, and UT of Puducherry have demanded complete overhaul of the GST rate structure and simplification of the procedures.

Puducherry Chief Minister V Narayanasamy said the peak tax rate should be 18 per cent except for one or two items, which could attract a higher 28 per cent tax.

“But most of the items were brought under the 28 per cent category (under GST) which the Congress has been opposing,” he said. The tax filing procedures in GST are also cumbersome, he said. Construction industry material and toiletries both attracted the peak tax rate, he pointed out.

“Common man is affected. GST was brought to simplify procedures and to facilitate common people to purchase items” but that is not happening, he added.

Karnataka Agriculture Minister Krishna Byre Gowda said the Congress had earlier asked that the GST rate should not be more than 18 per cent but the government went ahead with the five tax rate slabs of 0, 5, 12, 18 and 28 per cent.

With inputs from agencies