Niti Ayog in favour of multi-rate GST structure

The Dollar Business Bureau

Amidst deliberations over the proposed multi-rate structure of the Goods and Services Tax (GST), Niti Ayog Vice Chairman Arvind Panagariya has come out in full support of the move saying the regime will help curb any possible rise in inflation and loss in income.

The proposal had been made during the GST Council meeting held on October 19 wherein the finance ministry also talked about levying an additional cess on demerit goods such as certain ultra-luxury items and sin goods like tobacco, pan-masala, aerated beverages, etc. While the states have expressed discontent over the proposal, Panagariya seems to be in favour of the same saying the move will not dilute the original idea of a single unified rate.

The GST council is presently debating a proposal to have a four-slab tax structure for GST with 6, 12, 18 and 26 per cent or implement single tax rate for all commodities. The implementation of the same is expected to be carried out from April 1, 2017.

Meanwhile, former finance minister P Chidambaram expressed his concerns about having a multi-structure GST terming it as similar to the old system of charging different kinds of VAT. In his view, not having a single tax regime will be like fooling the country in the name of a new system.

Chidambaram shared this information during an interactive session with IIM Calcutta students on economic reforms.

This has been clearly contradicted by Panagariya who said, “If you do a single rate (16 or 18 per cent) then some rates you will have to bring very far off. Obviously, then there will be inflation on those particular commodities (with lower rates of tax).”