CEA Dr Arvind Subramanian Committee suggests GST rate of 17-18 per cent
Chief Economic Advisor Dr Arvind Subramanian led Committee has recommended standard rate for Goods and Services Tax (GST) at 17 to 18 per cent.
The Committee has submitted its report to Union Finance Minister Arun Jaitley in New Delhi.
Recommendations of Dr Arvind Subramanian Committee
- Standard GST rate of 17 to 18 per cent. It is the rate at which most products would likely be taxed. Not to specify GST rate in Constitutional Amendment Bill.
- Revenue-neutral rate of 15 to 15.5 per cent. It is a single rate at which there will be no revenue loss to the centre and states in the GST regime.
- Eliminate all taxes on inter-state trade including one per cent inter-state tax on transfer of goods.
- Two options for states: Single rate of 1 per cent or a range of 17-18 per cent. Allocation to states will depend on revenues raised by Centre and states.
- Three-tier GST rate structure: Essential goods will be taxed at a lower rate of 12 per cent. Demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products will be taxed at 40 percent and remaining all goods will be taxed at a standard rate of 17 to 18 per cent.
- Excluded real estate, electricity and alcohol and petroleum products while calculating tax rates but suggests bringing them under the ambit of GST soon.
Union government had set up the committee under chairmanship of CEA Dr. Subramanian in June 2015 to arrive at GST rates by factoring in the economic growth rate, taxpayer base and tax compliance levels.
Goods and Services Tax (GST)
- GST aims to bring uniform indirect tax regime throughout the country by subsuming central and state indirect taxes into single indirect tax.
- It seeks to enhance fiscal federalism by removing indirect tax barriers across states and integrate the country into a common market, boosting government revenue and reducing business costs.
Categories: International Current Affairs 2017