GST panel's proposed tax rate evokes positive response

Industry bodies like FICCI, ASSOCHAM and PHDCCI have welcomed the Chief Economic Adviser Arvind Subramanian’s proposed tax rates under GST system Deepak Kumar | The Dollar Business Bureau

The government aims to implement the GST from April 1, 2016

Several industry experts on Monday welcomed the GST Council’s proposed tax rate and said the recommended tariff under the uniform tax regime would bring transparency and competitiveness in the Indian market, thus benefitting traders as well as consumers. The government aims to implement Goods and Services Tax (GST) system from April 1, 2016. However, the bill seeking amendments in the constitution for enforcing the tax reform is yet to be cleared from the Rajya Sabha. The GST Council set up by the government has proposed tax rates ranging from 15% to 18% for various goods and services. “The rate should be 17-18% for goods; but for services, rates should be different. If services are charged at the similar rate, then prices will go up and will add to inflation. Goods should be chargeable at maximum 18% and services should be at not more than 16%,” Bimal Jain, Chairman of the Indirect Tax Committee at the PHD Chamber of Commerce and Industry (PHDCCI), told the Dollar Business. Industry bodies like the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) also supported the Chief Economic Adviser Arvind Subramanian’s proposed GST rate of 18% and lower rate of 12% on specified goods. “FICCI welcomes the recommendations put forth by the GST panel today. GST is expected to add about 2% to our GDP and will accrue long-term benefits not only to government, industry or traders but to the final consumers as well,” FICCI Secretary General A Didar Singh said. “This rate structure is quite appropriate and will be anti-inflationary for indigenous goods, however the cost of services will go up including some essential services like banking, telecom and information technology (IT),” ASSOCHAM said in a statement. Experts also welcomed the proposal of abolishing the 1% additional inter-state tax and said the move will eliminate the cascading effect on cost of production by 4% to 6% as goods, more often than not, move four to six times during entire value chain. “Abolition of 1% additional tax on inter-state supply of goods is a welcome step. Imagine goods manufactured entering into a supply chain has to go through four layers to reach the customers, so there will be 4% additional tax, which is cascading. The government has agreed upon a five-year compensation for the manufacturing states, hence they should not get worried of,” Jain said. Confederation of All India Traders (CAIT) National President B C Bhatia, too, hailed the withdrawal of the 1% inter-state tax. However, he suggested that the government should include stakeholders before finalising the rate to ensure there is a consensus among the government and the industry. “The government should consult the stakeholders before finalising the rate. This will also help develop a consensus among stakeholders. There should be an in-depth assessment of the market and how the rate would impact the overall industry in the future,” Bhatia said. Across the 160 countries where GST is applicable today, average median GST rate is 16.4%. Considering its competitor China, whose GST rate is 17%, the Indian government aims to keep its GST rate somewhere in the proximity.

December 07, 2015 | 02:50pm IST

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The Dollar Business Bureau - Dec 07, 2015 09:23 IST

GST panel's proposed tax rate evokes positive response

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