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Think-tank suggests 17-18% cumulative Goods, Services Tax



The National Institute of Public Finance and Policy (NIPFP), a fiscal policy think-tank, has said that the combined goods and services tax rate for Centre GST and the State GST should be about 17-18 per cent. "We have submitted a note where it has been suggested that the combined GST (central GST and State GST) should be 17-18 per cent", Dr M Govinda Rao, Director, NIPFP, said here at an industry event. This suggested rate (17-18 per cent) is substantially higher than the 12 per cent (centre-5%, States-7%) recommended by a Task Force set up by the Thirteenth Finance Commission. Both the Centre and the State Finance Ministers are yet to arrive at a consensus on what the rates should be even as the first discussion paper on GST provides a broad framework for the proposed dual-GST system. India is looking to implement a dual-GST system – one at the central level (Central GST) and the other at the state level (State GST). Moving to a GST regime is likely to broaden the tax base for both the Centre and the States. The Central GST will extend up to the retail stage, an improvement over the current practice of levying cenvat (excise) only upto the manufacturing stage. Also, States are expected to be allowed to levy State GST on services. Necessary constitutional amendments are likely to be undertaken in the upcoming budget session of Parliament. Meanwhile, State Finance Ministers are likely to meet on January 7 under the aegis of the Empowered Committee to discuss the vexed issue of State GST rates. Indications are that the State Finance Ministers will also discuss the recommendations of the Task Force of the Thirteenth Finance Commission. – www.thehindubusinessline.com