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CEA panel on GST for 17-18 pc rate, dropping of 1 pc additional levy

New Delhi :The new Good and Service Tax has been a thrown in the flesh of NDA government. The GSP panel which has been formed by the government to review the new tax formation has suggested 17-18 per cent GST rate and dropping of the one per cent additional tax on inter-state sales.

The Arvind Subramanian-headed panel, however, opposed inclusion of GST rate in the Constitution. The Congress has been demanding GST rate be included in the Constitution.

Describing GST as a historic opportunity to “Make in India by Making One India”, the panel has recommended a range for revenue-neutral rate (RNR) of 15-15.5 per cent for the proposed Goods and Services Tax (GST), with a preference for the lower one.

It also suggested a range of ‘standard’ tax rate of 17-18 per cent for bulk of goods and services while recommending 12 per cent for ‘low rate goods’ and 40 per cent for demerit goods like luxury car, aerated beverages, pan masala and tobacco. For precious metal, it recommended a range of 2-6 per cent.

While Subramanian at the press meet said the recommended standard rate is 17-18 per cent, an executive summary of the report released alongside suggested the rate to be between 16.9-18.9 per cent in a tabular form. The summary in narration, however, put the rate at 17-18 per cent.

Also, the panel recommended early inclusion of alcohol and petroleum products in GST.

“Bringing alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation without compromising on states’ fiscal autonomy,” said the report, which was submitted to Finance Minister Arun Jaitley today.

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 a two-third majority approval of Parliament for any change in rates for any product in future.

The government wants the GST Bill to be approved in the current session of Parliament to meet the April 1, 2016, rollout deadline.

“This historic opportunity of cleaning up the tax system is not just necessary in itself, but also to support GST rates that facilitate rather than burden compliance,” the report added.