CEA defends GST rates, quells fears on 'sin' tax

Chief Economic Advisor Arvind Subramanian on Monday defended a three-rate structure for GST, including a demerit or 'sin' tax of 40 per cent on products like tobacco and luxury cars, saying the recommendation is based on the current tax structure.

The panel headed by Subramanian had on Friday recommended a three-rate goods and services tax (GST) structure of 12 - 17/18 - 40 per cent, the last category being for luxury cars. He said currently many of the luxury goods "are already taxed at very high rates" and the recommendations are "just a status quo".

"I do not think there should be any concern on that," he said, adding that the panel has recommended "a very narrow list of things" for the so-called sin tax. Stating that his committee was in favour of keeping such a list limited with clearly-defined items, he said the issue will be discussed in the GST Council.