NEW DELHI: Commerce and industry minister
Piyush Goyal on Friday said any potential losses from GST rate rationalisation were accounted for and higher consumption would offset such losses.
"With such a big reduction in the tax rate, imagine how much the market will increase and due to that increase, the tax will also increase," he said. The GST rate rationalisation has a fiscal implication of Rs 48,000 crore on FY23-24 consumption base, according to the finance ministry estimate.
Goyal also talked about global trade developments concerning US tariffs and how it had nothing to do with the reforms. "This decision has no link whatsoever with the decision of any country. Such a big change cannot happen overnight," he said, noting that the US decision was made only last month, while govt had been working on GST rates for many months.
The minister has asked states to collect taxes honestly to safeguard revenues. He added that some items were kept at 5% instead of zero to protect input tax credits and avoid supply-chain issues. The finance ministry, he added, will soon spell out transitional arrangements for products already in the market before the GST rate deadline of Sept 22.
Goyal said the rationalisation is historic and extensive, which would reduce prices of almost every product used by all sections of society and benefit every sector of the industry.
The minister said it is the first time since independence that such a sweeping reform in indirect taxation has taken place, stating that "big relief was given to consumers, simplification was done for the ease of doing business and a new hope for youth, farmers, women, and every consumer".