Standard GST Rates @17-18% and GST Revenue Neutral Rate @ 15-15.5%- CEA Led Panel Recommends to FM
Finally ,its official that today the chief economic advisor, Mr Arvind Subramanian, has submitted his report on the goods and services tax (GST) to Mr Arun Jaitley,Finance Minister of India . .
The most amazing thing in this report is recommendation of 15-15.5% GST Revenue Neutral Rate (RNR) which is much below than the minimum expectation of 18% GST RNR . This is going to be a very welcome step amongst the trade of India .
It should be understood that GST is going to create a uniform market in India beside strengthening the country's tax institutions. In order to arrive at such GST RNR , the panel had explored 3 three different methods to calculate the crucial revenue-neutral rate.Mr Arvind Subramanian claimed that this was a technical exercise and we took into account methods using direct taxes, indirect taxes and an approach suggested by the NIPFP.
It is pertinent to note that RNR is a rate at which there will be no loss to state and central governments.
The committee decided to provide a range for the GST rate for various products and services:
1. Lowest GST Rates @ 12%
2.Standard GST rates @ 17-18 %
Maximum products and services to fall under this rate.
3.Higher GST Rates @ 40 % Cigarettes, luxury cars and beverages may attract higher GST rate.
AMLEGALS , a leading indirect tax law firm (viz. amlegals.com) had anticipated the same slabs on yesterday and since 2014 , it had published various research articles and claimed that the GST rates should be anything around 18 % to 24% and finally it has been also suggested by CEA led committee. ( please refer one of such an article of mine in May 2015 on http://taxguru.in/goods-and-service-tax/goods-service-tax-gst-time-deadlock.html )
The following sectors have been excluded while calculating the tax rate :