GST (goods and services tax) advent gives Centre room for hike in excise duty
After the recent Centre-state consensus on issues that so far delayed the introduction of GST, officials of the central and state governments are now struggling to agree on the structure of the “destination-based consumption tax” that militates against tax cascades and is expected to yield an additional one and half percentage points in GDP growth. As the table shows, the RNR for GST estimated by various agencies is much below the arithmetic total of central excise/service tax and state VAT rates at present. Of course, combined (Centre-state) GST rates being discussed among policymakers are much higher (from 16% to 20%) and so the Centre has flexibility to raise rates for a year.
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