On Monday, the finance minister Arun Jaitley cleared the rollout date of GST and it is scheduled for July 1. He also cleared that it will not lead to any major increase in prices of goods and the costs of some services may witness a marginal rise. Goods and Service tax (GST) has been hailed since India’s independence, after its implementation, it will replace the structure of central and state taxes with a one national sales tax, which is beneficial in doing business easily in the country.
While addressing CII-Kotak investors’ roundtable, finance minister Jaitley said in the next few days they will finalize the rates of tax for different goods and services and later, the simplified indirect tax (GST) will roll out from July 1. “The current indirect tax structure in India is fairly complicated…Those who transacted in either goods or services would have to deal with multiple authorities,” Jaitley said.
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Talking about the multiple markets in India, Jaitley said “The whole country was divided into multiple markets. So a free movement of goods and services was not possible. Now, the idea of GST was that let there is just one tax in the country”. He also said that under this new indirect tax regime, tax rates may go down marginally whereas services may experience some rise. The GST council had finalized a four-tier structure of 5, 12, 18 and 28%, which is scheduled to meet next week to decide on the various commodities and services in the selected tax brackets.
The luxury goods will get the peak rate tax rate with a cess most probably. Talking about the goods, Jaitley said “As far as goods are concerned, the tax is not likely to increase at all. If at all, it may marginally come down because of the cascading impact not being there and therefore, it is not likely to be inflationary”. While talking about the services, the minister said “As far as services are concerned, obviously, they will go up marginally and therefore, there will be some impact on this. So, goods and services may react a little differently”.
When asked the finance minister that what if GST would entertain price rises, then he said “I don’t anticipate this to happen significantly. If at all, this may be a transient impact”. While speaking at the separate interactive session on ‘India’s Business Environment Reforms and Opportunities’, organized by CII, Indian Embassy and Japan Chamber of Commerce, Arun Jaitley said that the constitution was amended by Parliament and supporting legislations passed and now state legislatures are passing the own State GST law.
“Currently, that process is on. I see no difficulty in it,” Jaitley said and also cleared that the rules and tax rates will be fixed at the GST council meeting on 18-19 May. The finance minister is also hopeful that the GST will roll out from July 1 and he sees no problems occurring in between it. “Hopefully, from 1 July, one of the largest tax reforms in India since Independence—a simpler, more efficient and cleaner taxation system would be introduced in the country which itself would ease the very processes of doing business,” he added. Jaitley also said at the investors meeting that GST is a sufficient tax and not implementing it would promote more complexity.
Jaitley said that the last date is 15 September for the introduction of the GST bill as per the constitutional amendment, but they kept July 1 as the target date. “So, we have a cushion of two-and-a-half months, but it looks like we will be able to begin on schedule,” he added. The finance minister called GST as a ‘transformational’ system and said that “there could be some small hiccups in the beginning but I think it’s understandable. We will be able to get over this”. At the end, the finance minister said that GST will definitely increase tax collection, trade and also promote ease of doing business.