New Delhi : India Inc on Friday welcomed the report of the committee on the goods and services tax headed by Chief Economic Advisor Arvind Subramanian recommending a revenue neutral rate range of 17-18 percent for the proposed GST.
“GST is expected to add about 2 per cent to our GDP and will lead to long-term benefits not only to the government, industry or traders, but to final consumers as well. We look forward to the implementation of an optimal GST,” Ficci Secretary General A Didar Singh said in a statement.
In recommendations aimed at breaking the GST logjam, the panel suggested dropping additional one per cent tax on inter-state sales over and above the Goods and Services Tax (GST) rate.
The panel, however, did not favour putting the rate of GST, which seeks to replace all indirect taxes including excise, service tax and sales tax, in the Constitutional Amendment Bill. “I hope this recommendation would expedite the process of introduction of GST. The ruling and opposition parties can come to an agreement based on the recommendation.
If the government finds the revenue collection down, GST council can revise the rate upwards any time,” said Sachin Menon, partner and head, indirect tax at international accounting firm KPMG in India.
Saloni Roy, senior director, Deloitte India said: “The suggested standard rate of GST of around 17 to 18 percent appears to be a modest rate for manufacturers who currently suffer the levy of central excise duty at 12.5 percent as well as state levies which may be as high as 14.5 percent to 15 percent.”
The government wants the GST Bill to be approved in the current session of Parliament to meet the April 2016, rollout deadline.
“On structure, in line with growing international practice and with a view to facilitating compliance and administration, India should strive toward a one-rate structure as the medium-term goal,” Subramanian said in the executive summary of the report.
He said the Goods and Services Council would have to choose the crucial rates, exemptions and also the allocation of revenues between the centre and states.
He said bringing alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation without compromising on states’ fiscal autonomy.
“Bringing electricity and petroleum within the scope of the GST could make Indian manufacturing more competitive; and eliminating the exemptions on health and education would make tax policy more consistent with social policy objectives,” he said. He said exemptions account to nearly 3.2 trln rupees annually.
[alert type=”e.g. warning, danger, success, info” title=””]
GST rollout to facilitate Make in India;
Panel favours bringing more goods, alcohol under GST and elimination of all inter-state taxes
Recommendes doing away with
“exemption raj”
Lowest rate of GST proposed at 12% and max rate at 40% while standard rate proposed at 17% and 18%
GST rate not to be included in the Constitution Bill
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