Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on Possible Tax rates under GST submits its Report to the Finance Minister; On the Revenue Neutral Rate (RNR) the Committee recommends the same in the range between 15 percent and 15.5 percent (Centre and states combined) with a preference for the lower end of that range based on the analysis made in the Report

Dated:- 5-12-2015 - Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on Possible Tax rates under GST submitted its Report to the Finance Minister here today. The Committee in its concluding observations has stated that this is a historic opportunity for India to implement a game-changing tax reform. Domestically, it will help improve governance, strengthen tax institutions, facilitate Make in India by Making One India, and impart buoyancy to the tax base. It will also set th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation will validate expectations of important government actions and effective political will that have, to some extent, already been priced in. Getting the design of the GST right is, therefore, critical. Specifically, the GST should aim at tax rates that protect revenue, simplify administration, encourage compliance, avoid adding to inflationary pressures, and keep India in the range of countries with reasonable levels of indirect taxes. There is first a need to clarify terminology. The term r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be distinguished from the standard rate defined as that rate in a GST regime which is applied to all goods and services whose taxation is not explicitly specified. Typically, the majority of the base (i.e., majority of goods and services) will be taxed at the standard rate, although this is not always true, and indeed it is not true for the states under the current regime. Against this background, the Committee drew a few important conclusions. Because identifying the exact RNR depends on a num .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

odities such as precious metals. The summary of recommended options is provided in the table below. Summary of Recommended Rate Options (in percent) RNR Rate on precious metals Low rate (goods) Standard rate (goods and services) High/Demerit rateor Non-GST excise (goods) Preferred 15 6 12 16.9 40 4 17.3 2 17.7 Alternative 15.5 6 12 18.0 40 4 18.4 2 18.9 All rates are the sum of rates at center and states On the RNR, the Committee s view is that the range should between 15 percent and 15.5 percen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dard rate. The Committee would recommend that lower rates be kept around 12 per cent (Centre plus states) with standard rates varying between 17 and 18 per cent. It is now growing international practice to levy sin/demerit rates-in the form of excises outside the scope of the GST-on goods and services that create negative externalities for the economy. As currently envisaged, such demerit rates-other than for alcohol and petroleum (for the states) and tobacco and petroleum (for the Centre)-will .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es). This historic opportunity of cleaning up the tax system is necessary in itself but also to support GST rates that facilitate rather than burden compliance. Choices that the GST Council makes regarding exemptions/low taxation (for example, on gold and precious metals, and area-based exemptions) will be critical. The more the exemptions that are retained the higher will be the standard rate. There is no getting away from a simple and powerful reality: the broader the scope of exemptions, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t s efforts to wean consumers away from gold, could lead to a standard rate closer to 17 percent. This example illustrates that the design of the GST cannot afford to cherry pick-for example, keeping a low RNR while not limiting exemptions-because that will risk undermining the objectives of the GST. The GST also represents a historic opportunity to rationalize the tax system that is complicated in terms of rates and structures and has become an Exemptions Raj, rife with opportunities for select .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and distortionary. A rationalization of exemptions under the GST will complement a similar effort already announced for corporate taxes, making for a much cleaner overall tax system. The Committee s recommendations on rates summarized in the table above are all national rates, comprising the sum of central and state GST rates. How these combined rates are allocated between the center and states will be determined by the GST Council. This allocation must reflect the revenue requirements of the C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lead to some uncharted waters, especially in relation to services taxation by the states. Preliminary analysis in this report indicates that there should not be large shifts in the tax base in moving to the GST, implying that overall compensation may not be large. Nevertheless, fair, transparent, and credible compensation will create the conditions for effective implementation by the states and for engendering trust between the Centre and states; The GST also represents a historic opportunity to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tation require that any evaluation of the GST-and any consequential decisions-should not be undertaken over short horizons (say months) but over longer periods say 1-2 years. For example, if six months into implementation, revenues are seen to be falling a little short, there should not be a hasty decision to raise rates until such time as it becomes clear that the shortfall is not due to implementation issues. Facilitating easy implementation and taxpayer compliance at an early stage-via low ra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bringing fully into the scope of the GST commodities that are proposed to be kept outside, either constitutionally or otherwise. Bringing alcohol and real estate within the scope of the GST would further the government s objectives of improving governance and reducing black money generation without compromising on states fiscal autonomy. Bringing electricity and petroleum within the scope of the GST could make Indian manufacturing more competitive; and eliminating the exemptions on health and e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version