The AICC social media wing also released a video clipping of Narendra Modi’s speech to show he had changed his stand on GST after opposing it during the UPA regime On her party’s insistence that the GST rate should be capped in the bill itself, Dev said, “the argument of the NDA government is that it will be a bad precedent to add a figure to the Constitution amendment bill”.
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The opposition Congress party is insisting on a GST rate of 18 per cent and the committee recommendation of 17-18 per cent meets that demand, which could lead to consensus on the rate structure. “We are not going to accept it. The BJP wants the GST which is anti-people”, he added.
Experts said that if petroleum, real estate and liquor are kept out of GST in the initial years as proposed in the bill passed in the Lok Sabha earlier this year, the available tax base would shrink and, hence, the combined centre-state GST rate could be more than 20 per cent.
The panel, with a mandate to suggest a revenue-neutral rate for GST, has favoured no additional tax on inter-state sales, including one per cent proposed in the GST Bill.
The revenue-neutral rate is that single one that “would preserve current revenues”, that is, at which there will be no loss to both state and central governments. Most goods will be taxed at the standard rate, according to the report, the first to come from the Finance Ministry. The committee recommended lower GST rate of 12% and a higher rate of 40%.
However, standard rate is expected to be at 17-18 percent, as per the suggestion made by the panel.
While the Congress party’s support for the GST is vital, it doesn’t guarantee its eventual rollout.
“There are sin products such as alcohol and cigarettes that need to be taxed high”.
“Recommendation towards wider coverage of sectors (including petroleum) within GST is much desirable in the interest of a cleaner indirect tax regime”, he said.
The government has indicated its willingness to remove the “entry tax”, but placing a ceiling on the rate has remained a contentious point.
The CEA said that it is a historic moment as GST exercise has been a long journey for the country. “But, careful monitoring and review will be necessary to ensure that implementation of GST does not create conditions for anti-competitive behaviour”, it said.
However, Jaitley continues to take a dim view of the Congress suggestions.
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Giving rationale for non-inclusion of GST rate in the Constitution, the report said, “setting a tax rate or an exemptions policy in stone for all time, regardless of the circumstances that will arise in future, of the macroeconomic conditions and of national priorities may not be credible or effective in the medium term”.
