Mumbai: India is working towards a single national sales tax rate which could be a mid-point between 12 and 18 percent, Finance Minister Arun Jaitley said on Monday, in an effort to simplify the tax structure.
The government set the range for the Goods and Service Tax from 28 percent to 5 percent on most items when the signature reform was introduced last year.
"Multiple slabs were fixed transiently in order to ensure the tax of no commodity goes up radically. This contained the inflation impact," Jaitley wrote in his blog. The 28% slab is now a dying slab, he said.
"A future road map could well be to work towards a single standard rate instead of two standard rates of 12 percent and 18 percent. It could be a rate at some mid-point between the two."
Jaitley's statement comes in the backdrop of the Centre reducing tax rates on 23 goods and services, including movie tickets, TV and monitor screens and power banks, and exempted frozen and preserved vegetables on Saturday. The reduced rates are likely to come into effect from January 1, 2019, Jaitley had said.
Congress leader Abhishek Manu Singhvi asked if losing in state elections had caused the Modi government to change its stand on single slab GST. Rahul Gandhi, the party president, said the prime minister had been jolted from his slumber.
Jaitley also said the country should look towards having slabs of zero, five percent and a standard rate for luxury and sin goods (alcohol, drugs, cigarettes, etc.).
The move is being viewed in political circles as an attempt to woo the middle class months ahead of 2019 Lok Sabha elections.
The government will also look at transferring cement into a lower tax slab as the next priority, he wrote.
In a veiled attack on the opposition which has criticised the patchy implementation of the GST, Jaitley said that the single tax system has greatly reduced the plethora of taxes that an entrepreneur had to deal with. Instead of filing 17 returns and dealing with 17 inspectors, GST has brought all the taxes under one roof.
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