GST rate cut may make India’s tax system unfair, Kerala Finance Minister explains why

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Published: September 12, 2019 1:07:19 PM

Amid the demand for goods and services tax (GST) rate cut on automobiles to revive the sagging sector, Kerala Finance Minister Thomas Isaac said that lowering of tax would only make the tax system unfair.

GST collections dip below Rs 1 lakh crore to Rs 98,202 cr in AugGST Council is scheduled to hold its next meeting on September 20 in Goa.

Amid the demand for goods and services tax (GST) rate cut to revive slowing economic growth, Kerala Finance Minister Thomas Isaac said that lowering of tax would only make the tax system unfair. It comes days after he said that reducing GST rate on auto would result in revenue loss for states. The central government may afford to lose revenue, but states can’t do it, he had told news agency IANS last week in an interview.

“It is not high GST rate that has caused auto crisis. Pre GST combined tax excluding Service Tax ranged between 32% to 54%. Now tax including Compensation Cess ranges from 29 % to 46% only. If Centre is keen to reduce it further, abolish Cess. The rate would come down to 28%,” Isaac’s last tweet said.

GST Council is scheduled to hold its next meeting on September 20 in Goa. Finance Minister Nirmala Sitharaman on September 6, 2019 had said in a press conference that it’s for the GST Council to decide on GST cut as she can’t do it alone. Even the Minister of State for Finance Anurag Thakur had said on the same day that the auto companies should also try to update the states about the issues faced by them as only then can the centre and state reach a consensus on GST cut in the next meeting.

Also read: Demonetisation, GST key reasons for slowdown, says Manmohan Singh; tells how Modi govt can revive growth

In August, Finance Minister Nirmala Sitharaman has announced a slew of measures to boost the automobile sector but industry experts have termed them inadequate. The vehicle manufacturers have also cut their production capacity to adjust to the weak demand. The sector has also reported massive job losses across auto value chain.

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