Letters: The right GST rate

This refers to the report "Which is the best GST rate?" (May 12). While analysing the issues involved in fixing the final rates for the Goods and Services Tax (GST) structure, the authors could have dwelt on the issues of educating and creating awareness among the consumers, who are the ultimate targets of these rates and also the state governments who are looking at the limited angle of revenue-neutral rate (RNR). As for the former, who are consuming goods or are availing of services, they are already under the burden of various taxes imposed in the anticipation of implementing the GST. The idea was that there won't be a cascading effect of some of the levies, as the manufacturer would get the benefit of taxes paid in the previous stages of production and so on. It is expected that with the implementation of the GST, the cost to the consumer will come down.

As for the state governments, they are to be convinced that with the GST, the tax net will increase and more and more small traders will be tempted to come under the net to get the benefit of taxes paid by them at the intermediate stage. Thus, the RNR should consider the increase in revenues after the GST's implementation.

As the central government has already assured for loss of revenue in the initial years, the effective rate should be between 15-20 per cent. If it is too high it will result in a situation where the maximum retail price becomes the minimum retail price.

Naresh Saxena New Delhi

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