High revenue neutral rate will cripple trade, industry: Ficci

By: |
New Delhi | November 12, 2014 8:05 PM

Revenue-neutral rates of nearly 27 per cent as suggested by a GST sub-committee would cripple the trade...

It is disturbing to note that a panel set up by the Empowered Committee of state Finance Ministers has proposed Revenue Neutral Rates (RNRs) aggregating to nearly 27 per cent for the proposed Goods and Service Tax. (Reuters)It is disturbing that a panel set up by the Empowered Committee of state Finance Ministers has proposed Revenue Neutral Rates aggregating to nearly 27% for the proposed GST. (Reuters)

Revenue-neutral rates of nearly 27 per cent as suggested by a GST sub-committee would cripple the trade and industry besides burdening consumers, Ficci said today.

“It is disturbing to note that a panel set up by the Empowered Committee of state Finance Ministers has proposed Revenue Neutral Rates (RNRs) aggregating to nearly 27 per cent for the proposed Goods and Service Tax.”

“A GST rate close to 27 per cent would cripple the trade and industry besides burdening the consumers. It will entirely negate the perceived advantages of GST,” the industry body said.

The Empowered Committee of state Finance Ministers, which met yesterday, reviewed the revenue neutral rate for the GST, comprising C-GST and S-GST, as suggested by a GST sub-panel.

The sub-committee had suggested S-GST rate at 13.91 per cent and C-GST rate at 12.77 per cent, which aggregates to almost 27 per cent.

“Considering that the Kelkar Committee on fiscal consolidation had recommended a rate of 14 per cent and the Task Force appointed by the 13th Finance Commission had suggested a rate of 12 per cent, prima facie the proposed rates appear to be highly excessive. Even the National Institute of Public Finance and Policy is reported to have suggested a rate between 12 and 20 per cent,” Ficci said.

“Though the aforesaid rate is yet to be ratified, the findings of the panel set up by the Standing Committee should be immediately made public so that these can be analysed by the stakeholders to determine whether the outcomes are based on reliable data and a rational analysis,” it added.

The proposed GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies.

“The trade and industry so far has not been updated on the status of various aspects of proposed GST like threshold limits, rates, items under the Negative List, GST compliance, the IT infrastructure, the administrative structure etc.”

“Government should come out with a paper on the latest status of the proposed GST incorporating the decisions which have been finalized between the Central Government and the states,” the industry body.

The GST rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1PM Modi’s Akshaya Tritya bonanza for farmers, Rs 20,000 crore under PM-KISAN scheme directly transferred to nearly 10 crore farmers
2Stuck realty projects get Rs 18,000 cr from SWAMIH fund
3Liquidity Crunch: New mechanism in the works to aid exporters