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CEA led Panel recommends RNR at 15-15.5 and eliminating Additional Tax of 1 on inter-state supply of goods

Goods and Services Tax - GST - By: - Bimal jain - Dated:- 7-12-2015 - Bracing to roll out the new Indirect tax regime - Goods and Services Tax ( GST ) from April 1, 2016, the Central Government on June 17, 2015 announced the setting up of two Committees to suggest tax GST rates and to look into IT preparedness for GST. The Government has entrusted Chief Economic Advisor, Dr. Arvind Subramanian-head of one of the two panels-with the task of proposing a Revenue Neutral Rate ( RNR ), or a rate at w .....

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recommending a RNR range of 17-18 % for the proposed GST. At the outset, the Committee clarifies the terminology RNR as under: The term revenue neutral rate (RNR) will refer to that single rate, which preserves revenue at desired (current) levels. In practice, there will be a structure of rates, but for the sake of analytical clarity and precision it is appropriate to think of the RNR as a single rate. It is a given single rate that gets converted into a whole rate structure, depending on polic .....

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mmodities such as precious metals. The summary of recommended options is provided in the table below: Summary of Recommended Rate Options (in %) RNR Rate on precious metals Low rate (goods) Standard rate (goods and services) High/Demerit rate or 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 *The Committee s recommendations on rates summarized in the table above are all national rates, comprising the sum of Central and State GST rates. .....

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ysis in this report; On structure, in line with growing international practice and with a view to facilitating compliance and administration, India should strive toward a one-rate structure as the medium-term goal; Meanwhile, the Committee recommends a two-rate structure. In order to ensure that the standard rate is kept close to the RNR, the maximum possible tax base should be taxed at the standard rate. The Committee recommends that lower rates be kept around 12% (Centre plus States) with stan .....

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s, very low rates on precious metals would lead to a high standard rate closer to 20%, distorting the economy and adding to inflationary pressures. On the other hand, moderately higher taxes on precious metals, which would be consistent with the Government s efforts to wean consumers away from gold, could lead to a standard rate closer to 17%. A rationalization of exemptions under the GST will complement a similar effort already announced for corporate taxes, making for a much cleaner overall ta .....

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ia by Making One India ; It would be advisable at an early stage in the future, and taking account of the experience of the GST, to consider 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 add the Government s objectives of improving governance and reducing black money generation without compromising on States fiscal autonomy. Bringing electricity an .....

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