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Arvind Subramanian panel doesn’t want GST rate to exceed 20%: Report

The Arvind Subramanian-led panel has said that compensation & new cesses warrant a rate of under 20%.

With the government getting ready to roll out GST (Goods and Services Tax) from April 1, 2017, the tax rate may not be over 20%. (Reuters Photo)

With the government getting ready to roll out GST (Goods and Services Tax) from April 1, 2017, the tax rate may not be over 20%. According to an ET Now report, the Chief Economic Adviser-led panel has said that a GST rate above 20% would be counterproductive. The Arvind Subramanian-led panel has said that compensation & new cesses warrant a rate of under 20%. “The CEA panel is likely to recommend the standard rate at 19-20%,” the channel said, adding that the panel is of the view that a small expansion in fisc is better than a high GST rate. “Revenue from new cesses will be offset by removal of exemptions,” the panel has said.

Recently, Subramanian said that the need to compensate states for any revenue loss from the goods and services tax (GST) would, if at all, be temporary as revenue would doubtless get a boost from the technology-enabled surge in compliance. Speaking at the Indian Express Group’s Idea Exchange programme, Subramanian, who had brought out a report in last December suggesting the revenue-neutral rate (15-15.5%) and standard rate (17-19%) for the proposed comprehensive indirect tax, based on certain assumption of the tax base (which largely holds true today) and the comparable tax rates prevailed in 2013-14, said that since the GST’s compliance benefit would be “huge” (“3-5 billion invoices would be automatically matched each month”), as one went along, the government could get the “same revenue from a reduced rate or a surfeit of revenue from the same rate”. Subramanian has also said that a moderate GST rate won’t be inflationary.

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