Govt panels suggest way to end GST deadlock, capping it at 17-18%

Govt panels suggest way to end GST deadlock, capping it at 17-18%
Govt panels suggest way to end GST deadlock, capping it at 17-18%

New Delhi, Dec 4

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]A[/dropcap] panel headed by Chief Economic Adviser Arvind Subramanian has sought to smoothen the path for the passage of the Goods and Srrvices Tax (Bill ) by addressing two key concerns of the Congress party. The panel has recoommedned a standard rate of 17-18 per cent under the proposed tax reform measures and called for scrapping of a 1 per cent additional levy by states on the inter-state transport of goods.

The Congress has demanded doing away with 1 per cent additional levy on inter-state sale of goods and putting a cap of 18 per cent on the GST rate through constitutional amendment and an independent dispute redressal mechanism.

In its report submitted to Finance Minister Arun Jaitley on Friday, Subramanian suggested a 40 per cent GST rate for luxury goods and tobacco at the higher-end and 12 per cent at the lower-end for essential goods.

The panel favours bringing petroleum products and alcohol under the GST regime. However, it has not supported putting the GST rate in the constitutional amendment bill.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he panel also suggested a revenue neutral rate of 15-15.5 per cent. A revenue-neutral rate means no revenue loss to the Centre or the states. It is expected that the implementation of the GST could increase India’s GDP growth rate by 2 per cent.

The constitutional amendment bill for introduction of GST has been passed by the Lok Sabha, and is pending in the Rajya Sabha, where the BJP-led NDA lacks a majority.

Meanwhile, in a written reply in the Lok Sabha Minster of state(Finance) Jayant Sinha said that the Government proposes to impose GST on alcohol products except alcoholic liquor for human consumption. It is proposed in Constitution (122nd Amendment) Bill, 2014 that tobacco will be subjected to GST along with the Central Excise Duty, he said.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]H[/dropcap]owever, the rate of duty to be charged on this product will be decided by the GST Council as proposed in the Article 279A of the Constitution (122nd Amendment) Bill, 2014, he added.

Sinha said that after introduction of GST, the VAT imposed by the states, Central Sales Tax, Excise Duty, Service Tax along with other indirect taxes would be subsumed into Goods and Service Tax.

The minister said that the GST will simplify and harmonize the indirect tax regime in the country. It is also expected that introduction of GST will foster a common seamless Indian market and contribute significantly to the growth of the economy. Further, GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders, he said.

Team PGurus


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