Arun Jaitley addressing Lok Sabha
Finance Minister Arun Jaitley: A person today has to go to multiple assessors. The nature of economic activity is changing.
A lot of economic resource is lost when trucks are kept waiting outside states. There is no free flow of goods and services in the country.
The object of the GST was can we have one tax with one assessing officer.
It should become a more efficient tax, which is not easy to breach, so compliance is higher.
To bring a simple system, an amendment was needed to the constitutional framework.
In division of power there was no grey area. The GST created the grey area. It would be one tax, centre and states would merge their tax.
In the process we have created India's first federal decision making body.
Also, goods will become slightly cheaper as these taxes have cascading effect when they go.
When idea of GST was created, centre and states pooled their sovereignty in the panel. If states make one or two changes, we will have 32 different laws and can forget GST.
Article 246 is there will be a GST which will be imposed by centre and states.
Congress leader Veerappa Moily: Who empowered the GST council? We want to know. There may be many repercussions.
Finance Minister Arun Jaitley: The GST council has the power under Article 279 A to make a recommendation. On basis of that recommendation, this parliament and legislatures, under 246 A, get the power to frame those laws.
Let there not be any confusion.
There are many commodities which will be zero rated - especially the food items. And if we had decided on a flat 15 per cent, then they would have been charged at that.
Then there are some items which are used by the poor. The centre and the state levy very minimal tax so they either should be taxed at five per cent or zero per cent.
You cant tax
hawai chappals and BMWs and baby food at the same rate.
We have to see which section of society uses it. So that's why there cant be a flat slab.
For one commodity, there will be one rate in the country. But you have to have separate rates for a BMW and a
hawai chappal else it will be a regressive tax.
All sin products or products harmful for health will be taxed at 28 per cent and the difference from current rate will go to compensation fund. This is one of the few indirect cesses which will remain for a transient phase of five years.
During the UPA, there was no consensus and you thought it was only on political grounds. But there, it was manufacturing states which called for compensation and the absence of that was a deal-breaker.
When we finally brought the compensation package, states started coming around.
Again you raised the question, why was it a Money Bill?
I dare anyone, provide me an example since the enactment of the constitution in 1950. Provide me an instance of a law imposing a tax and providing a machinery for collecting that tax be anything but a money bill. There is no example when such a bill was not a money bill.
Some members had a problem against the anti-profiteering clause. It says no one can benefit from the tax difference. It means if you get a tax rebate, you must pass it on to the consumer.
The decisions we can reach a consensus on we are taking those up, not going for vote.
I'm sure a few years later, even the ones which we don't agree on can be brought under the GST.
(On Veerappa Moily's query on impact on agriculture sector) Agricultural production is going to be zero-rated, where is the confusion?
Are you saying that 28 states including eight finance ministers from your party have conspired to harass one section?
Broadly, these are some of the important questions raised.
As I said, the council is going to be a permanent body. We have made sure all decisions will be taken by consensus.