GST should have been capped at 18%: Chidambaram

Former Union Finance Minister P. Chidambaram on Thursday said seven, or more, rates under the Goods and Services Tax system was a "mockery of GST" and that the tax rate should have been capped at 18 per cent.

Small and medium businesses were unprepared or under-prepared for the GST roll-out on July 1 and its implementation should have been deferred by two months, the senior Congress leader told the media here.

He said the Congress will campaign for a "true GST" and hold meetings to emphasise that the party was the original proponent of the indirect taxes reforms measure.

Chidambaram said the GST was envisaged as a single rate of tax on all goods and services in place of practically all indirect taxes.

The former Union Minister said "a single GST rate means a standard rate as well as a standard plus rate (on demerit goods) and a standard minus rate (on merit goods)", adding that some goods and services would be totally exempt.

"This is the GST that the Congress and the United Progressive Alliance government had visualised and which I announced on February 28, 2016, as our goal. What has been implemented, however, is a GST with seven, or possibly more, rates. It is a mockery of the GST," Chidambaram said.

"When we have rates like 0.25, 3, 5, 12, 18, 28 and 40 per cent, and possibly more because of the discretion vested with the state governments, how can we call this a 'one nation, one tax' regime?" he asked.

The Congress leader said the central government should have engaged leaders of political parties in opposition to forge a consensus on three rates but it failed to do so.

He said a Congress-led government would have certainly worked towards a single rate (with three variations) and would have capped the GST at 18 per cent.

--IANS

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