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GST now looks near and real with recommended rate: Sachin Menon, KPMG

A key committee set up by the government has suggested a standard goods and services tax (GST) rate of 17%-18%. Check the experts’ view on it. The panel headed by Arvind Subramanian recommended an elimination of all taxes in inter-state trade including the 1 per cent additional tax proposed in GST Bill.

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“Broadening the tax base through better compliance, capturing value addition post manufacturing, removing exemption and increase in expected consumption could be the swinger towards recommendation of a lower revenue neutral rate”, added Menon.

Oppositon parties also want the government to remove the 1 percent additional tax aimed to benefit “producing states” like Gujarat and Tamil Nadu.

Tewari again asserted that the Congress, without whose nod the passage of the GST bill in the upper house may be hard, will not cede ground on the matter of including the GST rate in the Constitution.

Speaking to CNBC-TV18, Congress spokesperson Manish Tewari explained the party’s rationale, saying that if the rate were to be included in the GST Constitutional Amendment Bill, it would prevent too much tinkering as the process to do it is long-drawn.

Subramanian said GST “will strengthen the country’s tax institutions, get rid of barriers within states and create a common market”.

“The government will study the report of the CEA-led committee on revenue neutral rate for GST and take a view on it”, Revenue Secretary Hasmukh Adhia said.

The committee submitted its report to Finance Minister Arun Jaitley on Friday and Subramanian made a presentation explaining the recommendations. He further added we should “avoid constitutionalising GST report”.

Once petrol, alcohol, real estate and electricity are brought inside the net, the standard rate should decline, she said.

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He spoke of the need for “as reasonable a rate as possible”.

Chief Economic Advisor Arvind Subramanian