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Business News/ Politics / Policy/  It’s Arun Jaitley vs Arvind Kejriwal again
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It’s Arun Jaitley vs Arvind Kejriwal again

Arun Jaitley hits out at Arvind Kejriwal; says keeping out luxury goods from GST would push up the rate under the new indirect tax regime beyond 18%

Arvind Kejriwal was one of the first to tweet his opposition to the central government’s move to tax jewellers. Photo: Priyanka Parashar/MintPremium
Arvind Kejriwal was one of the first to tweet his opposition to the central government’s move to tax jewellers. Photo: Priyanka Parashar/Mint

New Delhi: Hitting out at Delhi chief minister Arvind Kejriwal who criticised the Union government’s move to levy excise duty on jewellery, finance minister Arun Jaitley on Monday said that keeping out luxury goods from the goods and services tax (GST) would push up the rate under the new indirect tax regime beyond 18%.

Referring to Kejriwal’s comment against the levy of excise duty on jewellery, Jaitley said that Delhi itself levies value added tax (VAT) on jewellery.

“I have read Delhi chief minister’s comments on it that luxury goods like gold should not be taxed. I will welcome it if Delhi first abolishes VAT on gold. A Union territory which taxes skimmed milk, which taxes every alternate food product, which taxes even sweets," he said while addressing industry at the annual session of lobby group Confederation of Indian Industry (CII).

In this year’s budget, Jaitley proposed an excise duty of 1% without input tax credit and 12.5% with input tax credit on articles of jewellery except silver jewellery. Jewellery associations opposed this move and went on an 18-day strike.

Though the strike was called off last month after assurances from the government that jewellers will be protected from harassment by the tax department and will not face any unnecessary troubles, protests by the representative bodies have continued.

Capitalising on this discontent, Kejriwal was one of the first to tweet his opposition to the central government’s move to tax jewellers. He also addressed a rally of jewellers on Sunday asking the centre to withdraw the move, pointing out that this will lead to inspector raj.

Both Jaitley and Kejriwal have been engaged in a public war of words over the last few months. In December, Jaitley filed a criminal complaint against Kejriwal and some other Aam Aadmi Party leaders, saying they made defamatory remarks against him on alleged siphoning of funds from the Delhi and Districts Cricket Association (DDCA) when he was its president.

“The larger impact of this argument is going to be that if I keep a luxury item out of the proposed GST, then the standard rate of the GST will have to go up. Then for us to maintain that rate between 16-18% will become extremely difficult if the luxury goods are to be kept out of the GST itself and therefore the debate has to mature to see what is the impact of these steps on the larger interest of the economy," Jaitley said.

Chief economic advisor Arvind Subramanian, in his report on the revenue-neutral rate under GST, had also recommended increasing the tax rate on gold and other precious metals, arguing that a low tax regime for these items will increase the overall tax rate for other widely used goods.

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Published: 04 Apr 2016, 01:08 PM IST
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