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Milk, Mercedes can’t be taxed at single GST rate: Narendra Modi

PM Narendra Modi. Photo: PTI

New Delhi:Defending the government’s decision to go in for multiple slabs in the goods and services and tax (GST), Prime Minister Narendra Modi said items like milk and Mercedes cannot be taxed at the same slab while pointing out that prices have come for down for almost 400 groups of items.

In an interview to Swarajya magazine published on its website on Sunday, Modi said rates for most daily use commodities have come down.

“Earlier many taxes were hidden. Now, what you see is what you pay. Government has reduced taxes on nearly 400 groups of items. Around 150 groups of items have zero per cent tax rate. If you look at the rates, for most of the day-to-day commodities, the rate has actually come down. Be it rice, wheat, sugar, spices, etc, total tax levied has been reduced in most cases,” he said adding a large number of items of daily usage are either exempted or in 5% slab. “Some 95 per cent items fall in/below the 18 per cent slab,” he added.

Modi also countered critics who have termed GST complex and said it has helped in expanding the tax payer base while facilitating faster movement of goods across state borders.

“The number of enterprises registered from Independence until now was 66 lakh. 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 were indeed very complex?,” Modi questioned.

“Check-posts across the country have been abolished and there are no more queues at state borders. Not only are truck drivers saving precious time but also the logistics sector is getting a boost and thereby increasing the productivity of our country,” he added.

He pointed out that GST has been designed to eliminate Inspector Raj with the help of information technology. From returns to refund everything happens online, he said.

Taking a swipe at Congress, Modi said it would have been very simple to have just one slab but that would have meant taxing food items at a higher rate. “Can we have milk and Mercedes at the same rate? 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%,” he said.

Modi also defended his government’s implementation of this massive tax reform which subsumed 17 taxes and 23 cesses.

The National Democratic Alliance has been criticised for it’s hasty implementation of GST that led to many starting troubles including breakdown of the information technology network initially.“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,” Modi said.

“GST is an evolving system and we calibrate based on feedback from state governments, people, media, etc. A lot of feedback from the people, traders, etc has been incorporated.”

Modi also said GST has seen Indian cooperative federalism at its best. “We consolidated the states and developed proactively a consensus, where earlier governments had failed,” he said.

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