New Delhi: Senior Congress leader and Rajya Sabha MP Kapil Sibal today said the present GST structure may lead to a spike in inflation. He said that items such as petroleum products, real estate and liquor among others which are excluded from the GST leaves room for states to charge levies on these items at higher rates.
Speaking to NewsRise, Sibal said, “States will tax all those activities (that are excluded from GST) at higher rates. In short, GST will cause high inflation,”
Sibal said that it was the UPA government which had initiated the move towards GST and the Congress party didn’t wish to create hurdles in the way of such a major tax reform, but has its reservations. He said, “We didn’t want to sabotage the idea because we had initiated GST,”….. “Even it is not an ideal GST, we have supported it. We have our reservations.”
Commenting on the probability of tax rates going higher in certain cases and the ensuing effect on businesses, he said, “In current GST structure, rates can go up to over 50%. I think, they are now trying to create a regime which is going to make it very difficult for people to do business.”
Sibal said, that small and medium enterprises aren’t yet fully equipped and ready to embrace the GST. He said that multiple registrations of businesses, including banks and insurance companies in different states are adding to the confusion.
Sibal’s comments came on a day when the GST council met in Srinagar to decide tax rates on some of the items after it had assigned tax rates for 1211 .items earlier.