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 :