No reason to defer July 1 GST roll-out, says Arun Jaitley

As Bengal FM Amit Mitra has raised serious doubts over the feasibility of GST roll-out from July 1

Finance Minister Arun Jaitley on Monday said that the Goods and Services Tax (GST) is a simplified indirect tax regime and there is no reason to further postpone its targeted July 1 roll-out date.

"With all the procedural matters decided, registrations are taking place at a fast pace. Today I see no reason why we can't target July 1," Jaitley told CNBC TV18.

West Bengal Finance Minister Amit Mitra has raised serious doubts over the feasibility of GST roll-out from July 1, saying that the Goods and Services Tax Network (GSTN) was not ready to handle the large volumes of forms that would be received.

However, Jaitley said that other states' finance ministers did not share Mitra's view.

Negating any adverse impact of the GST on growth, Jaitley said there could be initial teething troubles but it would actually lead to the expansion of assessee base and taxpayer base.

"There may be teething troubles initially...I don't think there would be any adverse impact on growth. Disruption will be there because we are switching to a new system. But I foresee assessee base and taxpayer base expanding," he said.

The GST Council has decided the tax rates for all the goods and services.The council's next meeting is scheduled for June 11 to discuss the various representations received for the change of tax rates.

"The June 11 meeting is intended to be for undecided matters. Council is an accountable body. A lot of representations have come, which will also be discussed. But merely using the media for propaganda and putting pressure will not be entertained," he said.

Elucidating why a single tax rate structure was not feasible under the GST, Jaitley said that luxury, sin goods and food items, all could not be taxed at the same rate.

"It is a real system. It is not a complex system. You have a whole legacy of different products being taxed at different rates. If you had fixed one single rate and let us say the single rate had come to 14-15% — that seems to be the normal common sense — then from tobacco to luxury cars to other sin products would all be 15% and flour and rice would also be 15%. It would be disastrous if we did that," the Finance minister said.

"So we have taken all the food products which the common man uses, put them into zero, nil category. Similarly, in areas like clothing and footwear, which are again essential, we have seen the existing rate, allowed the equivalence principle to prevail, but for the more vulnerable sections — a footwear below Rs 500 and an apparel below Rs 1,000, we have given a concessional rate, and for the others, we have all fitted them into one bracket instead of multiple brackets, which existed earlier," he said.

Social and economic realities of India should be borne in mind, along with the tax paying ability of different sections, Jaitley said.