The Chief Economic Advisor Arvind Subramanian led panel submitted its report on Possible Tax rates under Goods and Services Tax (GST) to Finance Minister Arun Jaitley
Union government had set up the committee under chairmanship of CEA Dr. Subramanian in June 2015 to arrive at GST rates by factoring in the economic growth rate, taxpayer base and tax compliance levels
Recommendations:
Standard GST rate of 17-18%- It is the rate at which most products would likely be taxed
Not to specify GST rate in Constitutional Amendment Bill
Revenue-neutral rate of 15-15.5%- It is a single rate at which there will be no revenue loss to the centre and states in the GST regime
Eliminate all taxes on inter-state trade including one per cent inter-state tax on transfer of goods
Two options for states: Single rate of 1% or a range of 17-18%
Allocation to states will depend on revenues raised by Centre and states
Three-tier GST rate structure:
Essential goods will be taxed at a lower rate of 12%
Demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products will be taxed at 40%
Remaining all goods will be taxed at a standard rate of 17-18%
Excluded real estate, electricity and alcohol and petroleum products while calculating tax rates but suggests bringing them under the ambit of GST soon
