GST rate at 20% good for industry, consumers

The equity markets bounced back sharply on Wednesday amidst fresh buying in large cap stocks after the Rajya Sabha select committee on the Goods and Services Tax (GST) Bill presented its report in the Rajya Sabha. It suggested that the provision in the Bill that said the Centre “may” compensate States up to five years for any revenue loss be substituted by a commitment for compensation for five years. In the 245 member Rajya Sabha, it requires two-third members to support the bill and that is not going to be an easy task for the ruling combination.

Jaitley said the Congress has given its dissent note against the wishes of traders who are demanding the implementation of the GST, which is key to raising the country’s GDP. But the rate is being reworked by the sub-committee in view of taxation of petroleum products as also the 1 per cent additional tax which states can levy as part of the GST roll out.

The other major piece of legislation the government intends to take forward is the land bill – the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2015 – which is being considered by a joint committee of both houses.

“That is the matter which GST Council will decide”.

The Congress has objected to the proposed composition of the GST Council, the provision to allow manufacturing states to impose an 1% additional levy to cover for potential losses apart from its demand to protect the revenues of local bodies.

However, he was critical of the Congress’ stand. “It is hardly a dissent note on the Bill. Keep the compliance process simple considering the low threshold limits envisaged and ensure robust transitional provisions are put in place so the assesses are able to transition their existing credits to the new tax regime”, he said. The GST Council must be supplemented and reinforced with a GST Disputes Settlement Authority in toto, they suggested. The opposition party is also seeking that the states representation in the GST Council, which will overseas implementation of the law, should be increased to three-fourth from the proposed two-third.

NEW DELHI India’s main opposition Congress party will not support a landmark tax reform in a parliamentary session that begins on Tuesday unless Prime Minister Narendra Modi addresses its concerns about the measure, a senior lawmaker of the party told Reuters.

For this, Muralidharan said that even while the government looked at widening the tax base, it could the keep the GST rates moderate at below 20%.