GST logjam: CEA panel suggests dropping 1% additional tax

The panel headed by chief economic advisor Arvind Subramanian submitted its report on the Goods and Services Tax recommending a standard rate of 17 to 18 per cent for GST, it said on Friday.

“The revenue neutral rate is a range and the committee suggests it as between 15 percent and 15.5 percent”, Subramanian told reporters here while making a presentation of the report submited to Finance Minister Arun Jaitley. Check the experts’ view on it.

The panel on GST recommends eliminating all taxes on inter-state trade, including 1% additional tax proposed in the Bill.

“Broadening the tax base through better compliance, capturing value addition post manufacturing, removing exemption and increase in expected consumption could be the swinger towards recommendation of a lower revenue neutral rate”, added Menon.

Tewari again asserted that the Congress, without whose nod the passage of the GST bill in the upper house may be hard, will not cede ground on the matter of including the GST rate in the Constitution.

4, Remove 1% additional tax on inter-state sales over and above the Goods and Services Tax (GST) rate.

Even so, it fulfills several of the Congress party’s demands, “which should increase the likelihood of the GST passing through parliament”, Nomura’s Varma said.

The GST bill, which seeks to usher in a pan-Indian common market by reforming the country’s indirect tax regime, was passed in the Lok Sabha in May, but has been opposed in the Rajya Sabha, where the ruling Bharatiya Janata Party-led NDA does not have a majority. “If the government finds the revenue collection down, GST council can revise the rate upwards any time”.

The panel’s recommendation of bringing alcohol and petroleum within the GST purview may not find many takers. “I think that forms a very good basis for further discussion”, the Minister added.

Asked how practical it’s to keep GST rates in the Constitution, he said there are no rates in the Constitution “for good reason”.