PM, Congress spar over single GST rate

Milk, Mercedes can’t have one rate, says Modi; Chidambaram seeks 0% for milk, other essential goods

Prime Minister Narendra Modi. File

Prime Minister Narendra Modi on Sunday ruled out a single GST rate, saying a luxury car and milk could not be taxed at the same rate. Accepting the opposition Congress’s demand for a uniform 18% rate would lead to a spike in prices of food and other essential items, he said.

Responding to Mr. Modi’s remarks, former Finance Minister P. Chidambaram said milk and other food items could be exempted from tax. “Have multiple rates, but don’t call it GST... The world over GST is one rate. You can’t say, ‘I am introducing GST with multiple rates.’ Call it by another name; call it the RSS tax,” he said.

In an interview to the

Swarajya magazine posted on its website, Mr. Modi said the GST had, within a year of its launch, led to an over 70% jump in the indirect taxpayer base, demolished check posts and merged 17 taxes and 23 cesses into one single tax.

“It would have been very simple to have just one slab, but it would have meant we could not have food items at 0% tax 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. On criticism on implementation, Mr. Modi said the new tax regime was a massive change, requiring a complete reset of one of the world’s largest economic systems.

Even as the Congress claimed credit for the idea of the GST, Mr. Chidambaram criticised the implementation of the regime, and called for petroleum products and electricity, which constituted “50% of the GDP”, to be brought into the taxation regime.

Exempt essentials

Asked about the government’s logic that food and luxury items could not be taxed at the same rate, Mr. Chidambaram said food, milk and other essential commodities could be exempted from the GST. Petroleum products and electricity, which constituted “50% of the GDP”, should be brought into the GST regime.

Job losses

“Faulting the government on implementation of the GST, Mr. Chidambaram said the Tamil Nadu Minister of Industry had told the State Assembly that 50,000 units had closed down in 2017-18 and five lakh jobs had been lost. He said the total job losses in all industrial States would probably be close to a crore.

Asked about reports that GST receipts for April and May were picking up, the Congress leader said the figures released were gross amounts, not accounting for input tax credit and revenue sharing with States.

Mr. Chidambaram demanded that instead of businesses filing three returns a month in all States they had operations in, “only one return must be required to be filed once in a quarter”.

BJP criticised

Attacking the BJP for stalling the GST when in Opposition, Mr. Chidambaram said, “We are also relieved that the BJP, which stridently opposed the idea for five years, changed its patently wrong view and adopted the idea of the GST.”

“Unfortunately the story did not end happily — this government did bad things in a big way [demonetisation] or big things in a bad way [GST],” he added.

( With PTI inputs )