Press Trust of India
New Delhi, Dec 4: In recommendations aimed at breaking the GST (Goods and Services tax) logjam, a panel headed by Chief Economic Advisor Arvind Subramanian Friday suggested a revenue neutral rate for GST of 15-15.5 per cent and a standard rate of 17-18 per cent.
It also 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.
The main opposition party Congress, which had blocked the GST Bill in the Rajya Sabha in the last session of Parliament, has been demanding a simple GST and scrapping of the proposed levy of one per cent additional tax on goods. The party has also been demanding that the rate be part of the Constitution Amendment Bill. The panel, with a mandate to suggest a revenue-neutral rate for GST, has favoured no additional tax on inter-state sales, including one per cent proposed in the GST Bill.
It also suggested inclusion of alcohol and petroleum products in GST, as is being demanded by the Congress. The recommendations seem to suggest a middle-path approach in the deadlock between the Congress and the government, which didn’t want the GST rate to be part of the bill as it would require two-third majority approval of Parliament for any change in future rates for any product. The government wants the GST Bill to be approved in the current session of Parliament to meet the April 1, 2016, rollout deadline.
Meanwhile, replying to a question whether it was possible to cap the GST rate by mentioning it in the Constitution, Jaitley argued that it would not be prudent as sin products and polluting goods were needed to be taxed at higher rates. “One of the arguments also is that there are several kinds of products which will always have to be taxed higher, sin products will have to be taxed higher and polluting products will have to be taxed higher. Therefore you can’t have any mercy shown to them by accepting Congress party’s suggestion that 18 per cent cap on all these products in the Constitution itself,” he added. The GST Bill, which is being touted as the biggest reform in indirect taxes since Independence, is stuck in the Rajya Sabha because of political logjam.
