Finance Minister Arun Jaitley on Friday assured that new rates under the Goods and Services Tax (GST) regime will not bring any “surprise” as they won’t be significantly different from the existing rates.
“We are now in the final stages of fixing tariffs for different commodities. The formula under which it is being done has also been explained, and therefore, nobody is going to taken by surprise, it’s not going to be very significantly different,” Jaitley said while addressing the Confederation of Indian Industries’ annual summit.
The GST Council has finalised four rate categories of 5, 12, 18 and 28 per cent after unifying levies like central excise, service tax and VAT. Fitment will be done by adding the total incidence of current taxation (central plus state levies) and then putting the good or service in the tax bracket closest to it.
Jaitley said the GST Council has so far had 13 meetings and has never had to resort to voting to decide on any issue. “And therefore, all states representing different political complexions have all agreed (on GST structure),” he said.
Jaitley also said that some some tough steps needed to taken to make India a tax-compliant society.
The entire effort is to simplify both direct and indirect tax structure... some tough steps are required to see that India increasingly becomes a tax-compliant society because higher resources with the state is going to now mean greater investment in infrastructure and greater investment in rural India, and these are going to be the two primary drivers of growth.Arun Jaitley, Finance Minister
FIPB Abolition In Final Stages
Jaitley said that the government is in the final stages of doing away with the inter-ministerial body for clearing foreign direct investment proposals.
Ninety percent of investment in India comes through the automatic route, and whether multiple forums are required for clearing such proposals, or just one ministry can be given this responsibility is being looked at, said Jaitley who proposed abolition of foreign investment promotion board in Budget 2017-18.
Once the cabinet clears the abolition of FIPB, it would take around four weeks for the new mechanism to be operational.
Tax Reduction Must Be Passed On To Consumers
Jaitley also pointed out that the reduction in tax rates should be passed on to consumers by companies, and this principle cannot be questioned.
The government has included an enabling provision in the Central Goods and Services Tax Bill, which asks for passing the benefits on tax reduction to consumers.
Profit is not a bad word... but unfair enrichment is. And therefore the benefit of reduction in taxation is a benefit that consumers are entitled to. And that’s not a principle that can be seriously contested.Arun Jaitley, Finance Minister
The GST laws approved by Parliament have incorporated an anti-profiteering provision to ensure that the reduction of tax incidence is passed on to the consumers.
With inputs from PTI.