 "Ring-fencing of GST rate proposal vague: Experts")
Experts found Congress leader Anand Sharma’s demand for ring-fencing the goods and services tax rate vague.
“It is not clear how you ring-fence,” Satya Poddar of EY said. He said the demand was for a cap. Sharma, however, said his party needed an assurance, he did not talk about a constitutional cap.
Poddar said most countries prescribed GST rates in the law and not in the constitution. “The constitution amendment bill is an enabling provision. It should not say what should be within the GST and what remains outside,” he said.
The constitution amendment bill prescribes that alcohol, tobacco, real estate will be out of the GST. The bill also allows the Centre and states to continue with existing taxes on petroleum till a proposed GST Council, a body of Union and state finance ministers, modifies it. Poddar said the GST bill should have a mechanism to define the tax rate.
The rate can be changed any time by a simple majority. Besides, the cap should be prescribed only on the standard rate, he added.
A committee headed by Chief Economic Adviser Arvind Subramanian has recommended the standard GST rate be 17-18 per cent, that for essential goods 12 per cent, and that for demerit goods like tobacco 40 per cent.
Saloni Roy, senior partner with Deloitte said, "It is good to have rate that is known. But, I am not in favour of a constitutional cap." The draft GST bill does not prescribe tax rates.
Former Central Board of Excise and Customs Chairman Sumit Dutt Majumder said ring-fencing was a demand that the rate should not keep on rising, otherwise it would lead to inflation.
He added the rate could be ring-fenced only by the proposed GST Council.
The constitution amendment bill proposes the GST Council can recommend changes in the GST rate through a three-fourth majority. The states combined will have a two-thirds vote in the council, so the Centre and states must agree for any change in the GST rate.
“It is not clear how you ring-fence,” Satya Poddar of EY said. He said the demand was for a cap. Sharma, however, said his party needed an assurance, he did not talk about a constitutional cap.
Poddar said most countries prescribed GST rates in the law and not in the constitution. “The constitution amendment bill is an enabling provision. It should not say what should be within the GST and what remains outside,” he said.
The constitution amendment bill prescribes that alcohol, tobacco, real estate will be out of the GST. The bill also allows the Centre and states to continue with existing taxes on petroleum till a proposed GST Council, a body of Union and state finance ministers, modifies it. Poddar said the GST bill should have a mechanism to define the tax rate.
The rate can be changed any time by a simple majority. Besides, the cap should be prescribed only on the standard rate, he added.
A committee headed by Chief Economic Adviser Arvind Subramanian has recommended the standard GST rate be 17-18 per cent, that for essential goods 12 per cent, and that for demerit goods like tobacco 40 per cent.
Saloni Roy, senior partner with Deloitte said, "It is good to have rate that is known. But, I am not in favour of a constitutional cap." The draft GST bill does not prescribe tax rates.
Former Central Board of Excise and Customs Chairman Sumit Dutt Majumder said ring-fencing was a demand that the rate should not keep on rising, otherwise it would lead to inflation.
He added the rate could be ring-fenced only by the proposed GST Council.
The constitution amendment bill proposes the GST Council can recommend changes in the GST rate through a three-fourth majority. The states combined will have a two-thirds vote in the council, so the Centre and states must agree for any change in the GST rate.
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