Union Finance Minister Arun Jaitley ruled out a single rate for Goods and Services Tax (GST) but hinted that further rate cuts are likely in the coming days.
"Those who are speaking of a single rate for GST have no understanding of the tariff structure. Food items have to be taxed at nil. 'Common-man items' have to be taxed at the lowest rate of 5 per cent," the Business Standard quoted him as saying.
Last week, Congress vice-president Rahul Gandhi hit back at the Centre and called GST as "Gabbar Singh Tax." "With five slabs, it is the Gabbar Singh Tax, but with one tax, it is GST. Neither Gujarat nor India needs the Gabbar Singh Tax. The Congress had clearly told the BJP that there should be one tax with an 18 percent cap and a simple tax (at that)," Gandhi said in a rally in the poll-bound Gujarat.
To counter Gandhi's remarks, the finance minister said, "The people who had got used to 2G (telecom) and coal block (allocation) scams, will have objections to a legitimate tax."
The finance minister recently said that "In four months, we have rationalised the 28 per cent slab. Such rationalisation (in future) depends on revenue buoyancy."
Jaitley further said that the government expects the benefit of the lower rates to be passed on to customers, which will keep inflation in check.
"Luxury goods, sin products, and products hazardous to the environment and health can't be taxed at the same rate as 'common-man products'. Wheat, rice, sugar can't be taxed at the rate as a Mercedes car or a yacht or tobacco," Jaitley said.
The consumer price index-based (CPI) inflation rose to 3.58 percent in October from 3.28 percent in September, BS reported.
Currently, GST has five rate structures of 0, 5, 12, 18, and 28 percent. Last Friday, the GST Council in its 23rd meeting in Guwahati, Assam, brought down GST rate of 177 products from 28 percent slab to the 18 percent slab.
After the pruning the 28 percent slab, it has been reduced to 52 items from 227. This will cost the government an estimated Rs 20,000 crore.