New Delhi: Today is the first death anniversary of former Finance Minister Arun Jaitley. On August 24 last year, he said goodbye to this world. Arun Jaitley has a significant contribution in implementing the new tax system ‘GSI’ in the field of indirect tax in the country. GST was implemented in India on July 1, 2017, during Jaitley’s tenure as finance minister. Remembering him on Jaitley’s death anniversary, the Finance Ministry has given information about changes in the tax system from GST.
The Finance Ministry has said in several tweets that before the GST was implemented, the standard rate of tax had reached 31% in many cases due to the combinatorial effect of VAT on VAT, excise, central sales tax and tax in the country. The imposition of a different rate of tax in each state on markets spread across the country led to huge inefficiency and high cost of compliance. Under GST, compliance is constantly improving and the taxpayer base has almost doubled to 1.24 crore. According to the Finance Ministry, GST has reduced the rate at which people have to pay tax. According to the RNR committee, the revenue neutral rate in the country was 15.3%. In comparison, according to the RBI, currently the weighted GST rate is only 11.6%.
The Finance Ministry has said that it is now widely accepted that GST is favorable to both consumers and taxpayers. Higher tax rates prior to GST acted as a disruptive step towards paying taxes, while lower rates under GST helped to increase tax compliance.
After the implementation of GST, the taxpayers base has almost doubled. At its inception, the number of taxpayers covered by GST was around 65 lakhs. Now the taxpayer base is more than 1.24 crores. A specialty of GST is that all the processes in this are fully automated. So far 50 crore returns have been filed online and 131 crore e-way bills have been generated.
The Finance Ministry says that since the introduction of GST, the tax rate on a large number of items was brought down. Now the 28% rate is almost entirely confined to addictive products and luxury items. Out of the total 230 items of the 28% slab, about 200 items have been transferred to the lower slab. GST is either zero or 5 per cent on most everyday things. The tax rates on commonly used items like hair oil, toothpaste and soap were 29.3 per cent before GST was implemented, but 18 per cent in GST.
Refrigerator, washing machine, vacuum cleaner, food grinders and mixers, juice dispenser, shaver, hair clipper, water heater, hair dryer, electric smoothing iron, up to 32 inch television, the earlier tax rate was 31.3 percent, now these things 18 per cent is under GST. The tax rate on cinema tickets was anywhere between 35 to 110 percent before. The rate in GST is now between 12 and 18 per cent. The GST has provided significant relief to the construction sector, especially the housing sector. It is now placed in the 5% tax slab. GST on affordable housing has been reduced to 1%. 5 percent GST is applicable on restaurants.
According to the Finance Ministry, businessmen with annual turnover up to Rs 40 lakh are exempt from GST. Initially this limit was Rs 20 lakhs. Additionally, people with a turnover of up to Rs 1.5 crore can opt for the composition scheme and pay only 1% tax for the goods.
