Govt may not hike indirect tax rates
“If the overall objective is to improve revenues, then leaving rates unchanged could also work as it could help companies and in turn improve the tax collection,” the person argued.
The move, if it goes through, would also be in sync with the overall structure of the proposed goods and services tax (GST).
M Govinda Rao, director, NIPFP had also argued against such a move, pointing out that it could necessitate a sudden cut in excise and service tax rates when GST would be introduced. Instead he called for rationalisation of excise duty through measures such as lowering the threshold for the levy to Rs 1 crore and hiking the tax rate to 12 per cent across board .
“These steps will help garner additional revenue,” he had said in an interview to The Indian Express.
* The finance ministry was said to be considering hiking rates of service tax and excise duty by 2% to plug the fiscal deficit
* This would mean bringing excise duty rates back to the pre-crisis level of 14% and service tax to an all-time high
* Additionally, it would make goods and services more expensive and could dampen consumer demand to some extent
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