Uniform GST rates can't be done ignoring political realities: CEA Subramanian

Arvind Subramanian, Chief Economic Advisor to Prime Minister Narendra Modi, today said it is easy to advocate one uniform GST rates for all goods, but it cannot be done ignoring political realities.

He also said that no one wants to tax essentials consumed by poor.

"My own view is that, we need more simplicity in India and we need to go towards at some stage bringing in uniformity in GST rates, but we cannot do that divorced from political realities," he said responding to a PTI query at interactive event here.

"No political system can accept BMW cars or cigarettes being taxed at 18 per cent rate," he added.

He responded when he was asked to comment on the Congress's stand demanding capping of GST at 18 per cent which led to a war of words between Modi and former Union finance minister P Chidambaram.

Chidambaram on March 29 had countered Modi for calling it a "grand stupid thought" and asked if the government considered Subramanian also stupid for voicing the same argument.

"Why can't the normal GST rate be 15 per cent and Revenue Neutral Rate plus rate on luxury goods be 18 per cent ...," Chidambaram had said.

He also said that nobody wants to tax essentials which are consumed by poor.

However, as long as GST rates are kept relatively clean and simple, Subramanian said, India will make progress.

For instance, the 28 per cent GST rate was brought down by GST Council over the period of time because many felt it was high, Subramanian said.

"Going forward more such things (reduction in GST rates) will happen," he added.