'Tax rate under GST to be less than 18%'

Deepak Kumar | The Dollar Business Bureau 

  Finance Minister Arun Jaitely on Wednesday said goods and service tax rate (GST) is almost certain to be less than 18%. He hoped for an early implementation of the uniform tax regime in the next year. “We are almost certain that the rate is going to be less than 18%, or much less than 18%, and I think, we should be settled with that,” Jaitely said, addressing “GST in India” session, jointly organised by industry bodies FICCI, PHDCCI, CII and CAIT. As per the existing multi-layer taxation norms, duties levied at various stages add up to 29% to the cost of a product manufactured in the country. According to experts, to make Indian products competitive in the global market, the total tax should not be more than 16% —the average tariff  enforced by most of the countries that have implemented GST. Jaitely underlined the importance of the GST, particularly in the wake of the country’s current economic situation, and said several factors including shrinking exports, global slowdown in demand and less than normal monsoon for the second straight year has hurt India’s growth potential. The finance minister also said that India has the potential to grow faster, and the current growth rate of 7.4% recorded during the second quarter of 2015-16 isn’t what the industry or the government is satisfied with. “By the next year, if we are able to implement the GST and rationalise our direct taxes; we receive at least normal monsoon and some revival of global starts taking place, I don’t see any difficulty in India improving upon its growth rate by 1-1.5%. That will bring closer to our real potential,” Jaitely said. Referring to the dispute over 1% additional duty provision for manufacturing states under GST, Jaitely said scrapping the 1% additional duty would help consuming states and bring inter-state equity. The government had set the target of implementing GST from April 2016. The bill seeking amendment in constitution for implementing the new system has been cleared by the Lok Sabha. But it is yet to get nod from the Rajya Sabha due to lack of support from Congress and other opposition parties.  

December 16, 2015  | 03:50pm IST