In a chat with ET Now, Jayant Sinha, MoS, Aviation, says GST rates will be fitted to the rates that are closest to the one sbeing paid now.
How confident are you about the July 1 deadline for the launch of GST?
We are very confident that the 1st of July deadline will be met. A very deep and enduring consensus has been built in the GST council across all of the states and, every decision made in the GST council has been made by consensus and so we are very confident it will be passed in the states as well.
The GST council will meet on the 31st to finalise the classification of goods. How will that be done. How confident are you that it will completely end as far as all confusion on classification of goods is concerned?
There is a very simple principle that the finance minister has articulated in terms of classification. The rate that is nearest to your current rate is going to be applied. So for example, your current rate it works out is 17%, then the rate that will be applied will be 18%. We will try and match it and fit it to the rates that are closest where you are right now.
It is a game changing reform that has been in the making for a very long time. In your assessment, the year when we start from 1st of July, do you expect any accounting hurdles to come in? That is question number one and secondly what could be the kind of impact that we could see in terms of increase in tax base and GDP? Any back of the envelop calculation?
The transition, of course, is going to take time. Of course, everybody has been preparing for this for some time already and so a lot of the systems and software certainly as far as government is concerned are ready. But businesses are going to have to adjust, small shopkeepers and so on are going to have to adjust that transition will take time.
We, of course, expect the tax base to go up dramatically as that is what happened when service taxes were levied, when VAT was levied. Every time we have put in place new taxes and established a way for people who are doing businesses in an informal way to come into the formal economy, that has always expanded tax base which is to the benefit of our people because then they get more services.