‘Can’t tax milk, Mercedes equally’: PM rules out single GST rate

He rubbished the Congress suggestion a single rate as this would make commonly used food items more expensive.

“It would have been very simple to have just one slab but it would have meant we could not have food items at 0 per cent tax rate. Can we have milk and Mercedes at the same rate?” Modi asked in an interview with ‘Swarajya’ as the National Democratic Alliance government marked 1 July 1 ‘GST Day’. The tax reform was launched on 1 July last year.

“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%, at 18 per cent,” Modi said.

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 ‘Inspector raj’, he said, adding the GST is an evolving system which is calibrated based on feedback from state governments, trade and other stakeholders.

Modi said GST has in one year of its launch led to over an 70 per cent jump in the indirect taxpayer base, demolished check-posts and merged 17 taxes and 23 cesses into one single tax.

“In just one year after the introduction of GST, the number of new enterprises registered is 48 lakh. Around 350 crore invoices were processed and 11 crore returns were filed. Would we be looking at such numbers if GST was indeed very complex?” he asked.

He said checkposts across the country have been abolished and there are no queues at state borders any more. “Not only are truck drivers saving precious time but also the logistics sector is getting a boost and there-by increasing the productivity of our country. Would this be happening if GST was complex?” the PM said.

Asked whether GST was linked to his economic philosophy of minimum government, Modi said, “GST has been designed to end inspector raj with the help of information technology. From returns to refunds everything happens online.”

The PM said that GST was a massive change, requiring a complete reset of one of the world’s largest economic systems. “When it was finally introduced, it was our endeavour to make it simple and ensure sensitivity of the system. There are often teething troubles seen when a reform of this magnitude is carried out, but these issues were not only identified but also addressed in real time,” he said referring to a question on criticism from economists and businesses about the tax reform measure.