Finance Minister Arun Jaitley indicated that there could be scope for rationalisation of rates under the Goods and Services Tax (GST) as its implementation progresses.
He gave the indication in the Lok Sabha while replying to a debate on the Central Goods and Services Tax (Extension to Jammu and Kashmir) Bill, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Bill, 2017 which was later passed by a voice vote.
He said technically GSTN is not a government company but its board has government majority and therefore, no decision can be taken without the consent of the government nominee. The company is also open to audit by the CAG.
As an example, he said a chappal and a BMW car cannot have the same tax rate.
On the claims that after GST, disability will get costlier, he explained that while the different material used to manufacture a wheel chair may attract higher GST rates, the manufacturer can avail input credit for the final product which attracts 5 per cent tax. He said if zero per cent GST is levied on a wheel chair, it would become costlier as the manufacturer would then not be able to avail of the input credit at zero per cent.
The finance minister also wondered why certain manufacturers have hiked the prices of small hybrid cars even when the duty has been reduced.
Earlier, participating in the discussion on the two bills, Jayadev Galla (TDP) made a plea to the finance minister that five per cent GST imposed on red chilli should be brought down to zero. He also urged the minister to remove GST on non-processed products and naturally processed products.
M Rajamohan Reddy (YSR Congress) said the textile industry had been badly hit after GST and that the sector should be removed from indirect tax regime, else it would make the sector uncompetitive. He also stressed that there should be right coordination between Centre and states for proper implementation of GST.