India lost ₹900 billion due to tax rate cuts under GST, says former Finance Minister Arun Jaitley

• Former Finance Minister Arun Jaitley has slated the two years of Good & Services Tax(GST) saying that GST has proved to be both “consumer & assessee friendly.”
  
• The revenue hit a ₹900 billion annual loss due to heavy tax reductions under the Goods & Services Tax (GST) scheme.
  
• Jaitley rolled out the GST scheme in July 2017, which has widened the consumer base for tax collection by 84%.

Just a few days ahead of the Union Budget, former Finance Minister Arun Jaitley said that the government has taken an annual revenue hit of ₹900 billion due to tax reductions under the Goods & Services Tax (GST) scheme.

In a blog written to commemorate two years of introduction GST, Jaitley said that the new tax regime is both “assessee and consumer-friendly.”

Most of the consumer products now come under lower GST slabs and daily-use items are under the lowest tax bracket of 5%. While only luxury goods have been in the “white goods.” Luxury items such as small cars, consumer durables like AC and Refrigerators and cigarettes have been kept in 28% tax range.


He also said that arriving to a consensus in the Parliament over the implementation of the scheme had been difficult for the government.

“The critical point which enabled the Government to persuade the States was to cushion them with a 14% annual increase from the tax base of 2015-16 for a period of five years,” Jaitley reminisced.

Wider Tax Net

The consumer base for tax collection has widened over the last two years by 84%, enabling higher tax collections, thereby. The present consumer base has hit 12 million, which was 6.5 million.

“The high taxation of pre GST era pinched the consumers’ pocket and acted as a disincentive against tax compliance,” said Jaitley who has stepped down from the cabinet due to health reasons.

According to him, the transition to GST in India has been smooth, as this tax had brought down governments in many countries. There were protests in Surat following GST. However, two years on, the Narendra Modi-led BJP government was able to secure seats in Gujarat with high margin.

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