GST rate to be below 18 per cent, open to dropping 1 per cent additional tax: Arun Jaitley

New Delhi: Assuring the GST rate to be less than 18 per cent, Finance Minister Arun Jaitley on December 16, hinted at accepting Congress' stand on scrapping one per cent additional tax, but said their demand to incorporate the rate in the Constitutional Bill is not agreeable. The Congress has been stalling passage of the Bill in the Rajya Sabha where the ruling NDA is in a minority.

Speaking at an industry meet on GST, he said the proposed one per cent additional tax on inter-state sales was proposed as manufacturing states like Gujarat and Tamil Nadu are of the opinion that they would lose out on revenue as GST is more of a destination tax.

"I have told my friends in Parliament that I am ready to go back to those manufacturing states and tell them that we have guaranteed you to make good for all the loss suffered in the first five years. So, this one per cent additional levy issue is resolvable," he said.

Referring to the recommendation of the panel headed by Chief Economic Advisor Arvind Subramanian, he said it is "settled" that the standard rate is going to be less than 18 per cent or much less than 18 per cent. GST is to subsume all indirect taxes like excise duty, sales tax and service tax. In the new regime, there will be one Central GST, or C-GST, and State GST, or S-GST.

Currently, states levy sales tax or VAT on goods sold within their states and get a Central Sales Tax (CST) on sales made outside their territories. This CST will no longer be available in the new regime and a one per cent additional tax was proposed to make up for it.

On the other condition that 18 per cent tax should be put in the Constitutional Bill, Jaitley said, "Are tariffs part of Constitution? Can tariffs ever be cast in stone?" "Suppose there is a drought or a flood in 10 states and for one week you need to raise the tariffs, are you then going to amend the Constitution?," he asked. 

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