The government will forego revenue of close to Rs 1 trillion on all the items whose rates have revised to lower slabs under the goods and services tax (GST) regime, Finance Minister Arun Jaitley said on Friday. He also said the various income tax benefits given to the middle class during the Narendra Modi government's existing tenure will lead to revenue foregone of Rs 97,000 crore.
Jaitley gave these numbers in his latest blog, titled "How the Poor and the Middle Class Benefitted Most from the Modi Government Policies?"
"The GST is the single most important 'consumer friendly measure' in India. Taxes of most commodities have been brought down. Commodities have been made cheaper, even though the revenue sacrificed now after the rates revision, would be close to rupees one trillion," Jaitley wrote.
After the last round of rate cuts in the December GST Council meeting, of the 1,216 commodities which are used, broadly 183 are taxed at zero rate, 308 at 5 per cent, 178 at 12 per cent and 517 at 18 per cent. Only 23 items remain in the highest slab of 28 per cent, which includes items like tobacco products, luxury vehicles, molasses, air-conditioners, aerated water, large TVs, dishwashers, cement and auto parts. "Even though the taxation slab is Rs 2.5 lakh, those with an earning upto Rs 3 lakh need not pay any tax. A Rs 40,000 standard deduction has been given to all employees. Similarly, all investments in housing, insurance and other saving instruments, have been increased in the last four years. The cost of this to the exchequer is almost Rs 97,000 crores per annum," Jaitley said.
On the recently passed 10 per cent reservation for economically weaker sections in government jobs and educational institutions, he said, “The Prime Minister's decision to force an agenda for poverty based reservation is the single greatest recognition/concern for poor across the general categories and the need to eliminate poverty,” and accused the main opposition party Congress of paying "lip sympathy" and grudgingly supporting the Constitution Amendment Bill, passed by Parliament earlier this week.
"Poverty is a secular criteria" and it cuts across communities and religions," he said adding that "poverty as criteria for a carve out does not in any way contravene the basic structure of the Constitution".
Jaitley said that the original Constitution (unamended) in its Preamble mentions equality of opportunity and justice for all whether political, social or economic to be ensured by the state.
He also highlighted other government's initiatives like housing for every rural poor, universal health scheme - Ayushman Bharat -, and interest subvention, for economic upliftment of the poor.
"This is the first time that during the five-year tenure of a government a Rs 2 trillion annual tax rebate for both direct and indirect taxes is given to the middle class tax payer without a single tax being increased," Jaitley said.
"There is a method for economically empowering the poor. Their purchasing power has improved. This helps trade and businesses which impacts positively on the economy.
"This is the first five year tenure of a government where India has consistently remained the fastest growing economy in the world," he said.