New Delhi: The Chief Economic Advisor (CEA), Arvind Subramanian, has submitted a report on the goods and services tax (GST) to Finance Minister Arun Jaitley on Friday, which will outlines the scope of the ambitious tax to create a national market.
Sources said, Subramanian-headed panel suggests revenue neutral rate of 15-15.5 per cent for GST. It was learnt that the panel also recommends eliminating all taxes on inter-state trade, including 1% additional tax proposed in the GST Bill.
However, standard rate is expected to be at 17-18 percent, as per the suggestion made by the panel. The panel suggested a 40 per cent GST rate for luxury goods and tobacco at the higher-end and 12 per cent at the lower-end for essential goods.
CEA @arvindsubraman : Standard Rate of GST proposed to range 17-18%— Ministry of Finance (@FinMinIndia) December 4, 2015
It also suggested to bring alcohol and petroleum within GST's ambit. "Indian GST will be cleanest dual VAT, combining best of centralised and de-centralised models," Subramanian said.
"The need for GST is to improve governance and facilitate 'Make in India' by making one India," he said, after submitting the report.
CEA: GST will help in Make in India by making One India as far as indirect taxes are concerned.— Ministry of Finance (@FinMinIndia) December 4, 2015
Minister of State for Finance, Jayant Sinha said, "GST rate structure will have multiple parameters and will have significant degrees of freedom while making adjustments."
The constitution amendment bill for introduction of GST has been passed by the Lok Sabha but it is pending in the Rajya Sabha, where the ruling party does not have majority. This is the reason, union ministers including Prime Minister Narendra Modi is desperate to rope in Congress leaders to get their support for the passage of bill.
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