New Delhi: Chief Economic Advisory (CEA) Arvind Subramanian-led Committee on Possible Tax rates under GST has recommended standard rate for Goods and Services Tax at 17 to 18 percent, the rate at which most products would likely be taxed.
The committee has excluded real estate, electricity, alcohol and petroleum products while calculating tax rates, but has suggested to bringing them under the GST ambit soon.
The committee submitted its report to Finance Minister Arun Jaitley here on Friday.
In its concluding observations, the committee stated, “This is a historic opportunity for India to implement a game-changing tax reform. Domestically, it will help improve governance, strengthen tax institutions, facilitate ‘Make in India by Making One India’, and impart buoyancy to the tax base. It will also set the global standard for a value-added tax (VAT) in large federal systems in the years to come.”
Briefing the media after submitting the report, Subramanian said the Committee has suggested doing away with a proposal to levy a one percent inter-state tax on transfer of good.
He said the standard GST would range between 17% and 18%, while the GST rate on precious metals would be around 2-6%.
“There could be complexities and lags while rolling out the GST, but any evaluation should not happen over short horizons,” Subramanian added.
Minister of State for Finance Jayant Sinha said the GST rate structure would have multiple parameters and significant degrees of freedom while making adjustments. “The GST rate structure depends on decisions that are to be made on what the exemption are and which goods and services will go in which bucket.”
“The CEA report has suggested certain rates, which depends on important policy decisions that have to be made such as precious metal,” he said.
These set of recommendations would now go to the GST council, said the minister, adding that important policy decision would have to be made on some of these parameters.
The panel has also recommended a range of 12 to 40 percent for various products and services. The higher rate will be applicable to select products as luxury cars or tobacco.
The committee, however, did not favour putting the GST rate in the Constitution Amendment Bill.
The CEA also said the committee has suggested Revenue Neutral Rate (RNR) – which is a single rate that preserves overall revenues – of 15 to 15.5 percent with a preference for 15 percent. (ANI)