The Goods and Services Tax (GST) regime will benefit micro, small and medium enterprises as it provides for a single-tax system across India, West Bengal Finance Minister Amit Mitra said on Wednesday.
“The GST’s primary focus is to benefit micro, small and medium enterprises (MSMEs). In the single-tax regime, MSMEs must be benefitted. Bigger people (industries) can manage a multiple-tax regime but smaller players are fed up with multiple taxes,” the Chairman of the Empowered Committee of State Finance Ministers said.
The MSMEs act as ancillaries to big industries and are the most labour-intensive sector. About 94 per cent employment is being generated by the MSMEs and unorganised sectors, he said.
About the GST rate, he said it should not be too high. Otherwise, Mitra said, it would lead to inflationary pressure that will in turn affect the common people.
He said the rate should not be too low either so that the states’ revenue can be protected.
The Central Government has already announced it would compensate states’ revenue losses for five years.
Mitra said dual control would be allowed for entities with annual turnovers of more than Rs 1.5 crore. Small players with less than Rs 1.5 crore annual turnover will be in the state’s control only.
The constitutional amendment bill for the GST was placed in the Rajya Sabha on Wednesday.
Batting for the GST rate to be incorporated in the relevant constitution amendment bill itself — one of the main demands of the Congress, former Finance Minister P. Chidambaram said an 18 per cent base rate for this pan-India levy was also the most appropriate.
“The empowered committee is the one which arrived at a 15.5 per cent revenue neutral rate and came to the conclusion that 18 per cent should be the appropriate GST rate. The Congress did not suggest the 18 per cent rate — 18 per cent came out of your report,” he said in the Rajya Sabha.