Mercedes and milk cannot have same tax, says PM Modi

New Delhi: Prime Minister Narendra Modi on Sunday ruled out a single tax rate under the GST, saying Mercedes car and milk cannot be taxed at the same rate and accepting Congress party' demand for a uniform 18 per cent rate would lead to a spike in food and essential items' taxation.

Modi said the Goods and Services Tax (GST) has within one year of its launch led to over 70 per cent jump in indirect taxpayer base, demolished check-posts and merged 17 taxes and 23 cesses into one single tax.

The new tax regime, which subsumed central levies like excise duty and service tax and state taxes like VAT, is aimed at making indirect taxation "simple" while eliminating the Inspector Raj, he said, adding the GST is an evolving system which is calibrated based on feedback from state governments, trades and other stakeholders.

"It would have been very simple to have just one slab, but it would have meant we could not have food items at zero per cent tax rate. Can we have milk and Mercedes at the same rate?

"The government has reduced taxes on nearly 400 groups of items. Around 150 groups of items have zero per cent tax rate, " he said.

Finance Minister Piyush Goyal exuded confidence that GST collections will exceed Rs 13 lakh crore in the current fiscal and with increased revenues, there will be further scope to rationalise the tax rates. He said with more number of people coming under the tax net, and successful implementation of e-way bill system, there will be scope for rationalisation of tax slabs.

Stressing that India has been able to implement the significant indirect tax reform GST in the least disruptive manner, Union Minister Arun Jaitley on Sunday said best of the new regime regarding contribution to the society was yet to come.

Former Finance minister P Chidambaram on Sunday attacked the government on the first anniversary of the rollout of the Goods and Services Tax (GST), claiming it had raised the tax burden on the common man and had become a "bad word" among people.

The only section that appears to be happy about the GST is the tax administration that has acquired extraordinary powers, he added.

"It is widely perceived that GST has increased the tax burden of the common citizen; it has certainly not reduced the tax burden as was promised," Chidambaram said.