GST Council meeting: Delhi joins Congress-led governments in opposing 28 percent peak tax rate

Guwahati: Delhi joined the growing chorus of opposition against the highest 28 percent goods and services tax (GST) rate, saying a high rate would encourage black marketing. The Congress-ruled states have been demanding rationalisation of GST rates to bring down the peak tax rate from current 28 percent.

Delhi deputy chief minister Manish Sisodia, who is in Guwahati to attend the crucial meeting of the GST Council, said lower tax rates should have been implemented from 1 July, when the GST was rolled out.

“Tax rates should have been set lower from 1 July itself and I have said that 28% tax rate means you are encouraging black marketing”, he said.

The Congress-ruled states of Punjab and Karnataka, and union territory of Puducherry have demanded complete overhaul of the GST rate structure and simplification of the procedures.

Puducherry chief minister V Narayanasamy said the peak tax rate should be 18 percent except for one or two demerit items, which could attract a higher 28 percent tax.

“But most of the items were brought under the 28 percent category (under GST) which the Congress is not agreeing to,” he said. Also, the tax return filing procedure in GST is cumbersome, he said.

Common use goods are being charged 28 percent tax, he said adding construction industry, toiletries are all charged the peak tax rate. “Common man is affected. GST was brought to simplify procedures and to facilitate common people to purchase items. But that is not happening”, he added.

Sisodia said limits imposed for availing of the composition scheme need to be widely discussed, with a separate structure for small and medium enterprises (SMEs).

“I have always said bring real estate in GST because if you put 28 percent on construction activities and then suddenly it goes into a black hole because there’s no counting of where that is going”, he said.

On returns filing, he said the Delhi government was in favour of quarterly filings instead of current mandate for three different forms being submitted every month.

“The current return filing system has created confusion among businesses.” Sisodia said petroleum products, alcohol and real estate should be brought under the GST as it is one nation, one tax and such items cannot be kept out of the regime.

In the run-up to the assembly elections in Gujarat and Himachal Pradesh, Opposition Congress and its leaders have been targeting the government over difficulties faced by some businesses under the GST regime, with party vice-president Rahul Gandhi even calling it a ‘Gabbar-Singh Tax’.

Punjab finance minister Manpreet Singh Badal said his state wants rationalisation of tax rate, simplification of procedures and removing glitches in GST Network (GSTN). The Congress, he said, was in favour of inclusion of petrol, diesel, natural gas, ATF and crude oil in the GST. The five products along with alcohol have been kept out of GST for now.

Karnataka agriculture minister Krishna Byre Gowda said the Congress had earlier asked that the GST rate should not be more than 18 percent but the government went ahead with the five tax rate slabs of 0, 5, 12, 18 and 28 percent. The GST Council, headed by union finance minister Arun Jaitley, is meeting in Guwahati to consider pruning the list of items in the 28 percent tax bracket.

Haryana finance minister Captain Abhimanyu said the meetings cannot be related to any election because GST Council is represented by states and the Centre. “The same spirit of unanimity should continue,” he said.