The government would not allow increase of incidence of indirect taxes on manufacturing products under the Goods and Services Tax (GST) regime, Union Minister of State for Finance and Corporate Affairs Arjun Ram Meghwal said on Sunday.
He also said that with the standard rate of GST, there would also be slab-based rates for different manufacturing products for a transition period before moving gradually towards the single tax rate regime.
“Under the GST regime, the indirect tax rate on services will rise but for manufacturing sector, we will not allow indirect tax rate to go up from the present level because we want progress of programmes like Make in India, Digital India, Stand Up India. We will try keeping the rates at par,” said Meghwal on the sidelines of an event organised by MCC Chamber of Commerce and Industry.
He assured manufacturers that the indirect taxes would not be going up after the implementation of GST.
“There will be standard rate of GST and we are planning to bring slab-based rates. There will be exemptions also,” he said.
Meghwal said that slab-based rates are necessary to protect manufacturing sectors belonging to low tax brackets. “Some sectors like Bikaner papad where tax is just one per cent…how will these industries survive if a single standard rate (of about 18 percent or 17 percent) is applied,” he said.
Slab-based rates and the standard rate will be decided by the GST Council, he said.
Meghwal said at present, liquor and petroleum products are not under the GST ambit, but the government will review this position after a year.
Product-based and location-based exemptions will be examined by the GST council, he added.
Referring to a World Bank study, Meghwal said GST would help to achieve double digit GDP growth and would ensure free movement of goods.
On the inflationary situation post GST, he said: “We have discussed with RBI (Reserve Bank of India) on the inflation issue. We have prescribed a mechanism to keep the inflation rate at 4 per cent for next 5 years. With the adverse situation, it might go up to 6 percent but we will not allow inflation to go beyond this limit.”
On the proposal to change the financial year from April 1-March 31 period to the calendar year, he said: “The government sought public opinion on the proposal. Exporters have been demanding to change the financial from April 1 and requested to follow the calendar year. Most of major countries are following calendar year for their financial accounts.”
Elaborating on the proposed amendments on the Companies Act 2013, he said that the Parliamentary Standing Committee on Finance headed by former Union Minister Veerappa Moily has been looking into some of the amendments necessary to the companies act.
Urging businessmen to submit their views before the committee, Meghwal, who also holds the Corporate Affairs portfolio, said: “You should submit your views so that it can be incorporated in the amendments. Ministry of Corporate Affairs is keeping a close watch so that the new amendments can help the companies.”