This rate structure is quite appropriate and will be anti-inflationary for indigenous goods, however the cost of services will go up including some essential services like banking, telecom and information technology (IT), said The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The CEA panel has also suggested highest rate of 40 per cent on sin and luxury goods but not identified which items will be treated as luxury goods, in such situation it is feared that list of such goods may be expanded by including large number of normally used items by large population which is not desirable, said ASSOCHAM.
Such higher rate should only be applicable to sin goods, it added.
The removal of one per cent additional tax is a welcome step as it will remove the cascading effect on cost of indigenous production by four to six per cent as goods move four to six times during entire value chain, further said ASSOCHAM.
ASOCHAM has always been advocating dropping proposed one per cent additional tax and levy of moderate GST Rates on all tradable goods and services, therefore the chamber fully supports the recommendations of the CEA-led panel to include petroleum products alcohol into the ambit of GST.
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Further, it suggests that with respect to alcohol, in addition to GST, states may continue to collect additional state excise duty to maintain the current level of taxation on alcohol.
ASSOCHAM fully supports the CEA's view that rates can't be put in the Constitution Amendment Bill to make the rates inflexible, however the chamber feels that rates should be stable and predictable to attract investments.
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