Subramanian panel likely to suggest multiple rates for GST

The panel led by Chief Economic Advisor Arvind Subramanian may also recommend separate rates for two items which will not likely be subsumed under GST - petroleum for the time being and alcohol forever - senior officials aware of the matter said

A panel led by Chief Economic Advisor (CEA) Arvind Subramanian might suggest multiple revenue-neutral rates (RNRs) for the proposed goods and services tax (GST) based on different scenarios and leave it to the proposed GST council to decide on final rate.

The GST council will consist of the Union finance minister and finance ministers of the states.

The Subramanian panel might also recommend separate rates for two items which will not likely be subsumed under GST - petroleum for the time being and alcohol forever - senior officials aware of the matter said.
 

"The CEA-led panel may give multiple revenue-neutral rates, one of which will be decided upon by the council. There may be three-four options given by the panel. It is a sort of a compromise move since there are numerous stakeholders and just one suggestion may not be to the liking of all," said an official.

Sources said the matter of suggesting multiple options was discussed in a meeting earlier this week attended by Finance Minister Arun Jaitley, Minister of State for Finance Jayant Sinha, Revenue Secretary Hasmukh Adhia, and Subramanian.

The CEA had conveyed the multiple options to others at the meeting, the officials said.

Revenue-neutral rate is one at which there will be no revenue loss to states and the Centre under the GST regime. After the meeting, Sinha and Adhia had said that the Subramanian panel would submit its report on December 4 or 5.

"They (the panel) have pulled together a lot of data from many different sources, so we have a comprehensive set of numbers. We have finalised parameters that will be necessary to establish the rates. That is now being looked at. We will have something by the first week of December," Sinha had said.

The officials said that while the panel's suggestions were not yet known, the recommendations for RNR could range from as low as 16 per cent to as high as 22 per cent.

There have been various suggestions being floated by stakeholders. While a sub-panel of the empowered committee of state finance ministers had suggested almost 27 per cent taking central GST and state GST together, it was deemed too high.

Experts had suggested to a Rajya Sabha select panel that the rates should be within 20 per cent to make India's tax rates competitive with other markets. The Congress, on the other the hand, wanted GST to be within 18 per cent.

The panel was formed in June and tasked with recommending possible tax rates under GST, in line with the current level of revenue collected at the central and state levels.