Politics

GST ““ 50 Percent Goods & Services Likely to Be Exempted

The government desires the GST regime to be pro-poor with 50 percent of essential goods & services exempted from any tax. The first Goods & Services Tax Council meeting will be held on September 22-23 where further discussions will take place.

An official said that the tax exclusion of nearly half the goods & services would be “˜politically correct”™ for the Modi government as already 300 items in the Center & nearly 80 items in the states have this exemption.

The general consensus at a review meeting on Wednesday was that the new tax regime shouldn”™t put any additional inflationary pressure on the economy. It backed Revenue Secretary Hasmukh Adhia”™s proposal of a tax band of 8 to 26 percent with 4 tax slabs ““ probable slabs of 8, 10, 18 & 26 percent that can be tweaked to 10, 12, 16 & 25 percent. This would ensure that the revenue earnings remained unaffected & also keep the states on board as the final call will be taken by the GST Council comprising state Finance Ministers & headed by Finance Minister Arun Jaitley.

Hasmukh Adhia was asked to review & rework the rates & their revenue implications for both center & states & present the data in another review meeting likely this week.

The Arvind Subramanian panel had recommended a 3-rate structure with essential goods at 13 percent, demerit goods at 40 percent & the remainder at a standard 17-18 percent. It had estimated the revenue-neutral rate at 15-15.5 percent.

Congress has called for a low GST rate with a cap of 18 percent. It made it amply clear in the parliament that it is “˜pro-poor”™ & if the NDA Government fixed the rates above that the Congress party would go throughout the country pointing out to people that the government in “˜anti-poor”™. Although this facade of Congress of displaying empathy toward the poor is laughable as when the Congress had formed a structure of the GST during its times, it hadn”™t called for any cap on the rate. But now to deceive the public it”™s portraying a holier-than-thou attitude.


Vinayak Jain

You can follow the author on Twitter at @vinayak_jain

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