New Delhi:
A panel on GST or Goods and Services Tax has recommended doing away with one per cent tax by manufacturing states.
In a report, the panel headed by Chief Economic Advisor Arvind Subramanian has also suggested a revenue neutral GST rate of 15-15.5 per cent.
The panel has suggested a 40 per cent GST rate on luxury goods and tobacco and 12 per cent for mass consumption goods.
The report was submitted to the finance ministry today.
The committee has also emphasised that the GST rate should not be capped in the Constitution. "We prefer that it is not cast in stone," Mr Subramanian said.
The GST cap announced by the panel is well below 18 per cent that the Congress had demanded as a condition to support the measure.
Eliminating the one per cent additional tax by manufacturing states is also a Congress demand, which the government may eventually accept.
The arbiter on the final rate will be the GST council headed by Finance Minister Arun Jaitley, which includes all state finance ministers as members.
The Congress may object to the government refusing to add the GST rate to the Constitutional amendment, which will make any change in the future a long and tedious process.
"The panel was originally supposed to give its report around September. There were delays because wide-ranging inputs and suggestions were required," said a government official who declined to be named.
The panel has suggested what is known as a revenue-neutral rate as agreeable to all stakeholders as possible. A revenue-neutral rate means no revenue loss to the Centre or the states.
The GST regime is expected to club state levies into a single tax regime and integrate the country into a common market by removing barriers across states.
The government wants to implement GST by April 2016, but the deadline may be missed if Parliament does not pass the constitutional amendment bill in the winter session. The government needs to support of the Congress in the Rajya Sabha, where it is in a minority.
In a report, the panel headed by Chief Economic Advisor Arvind Subramanian has also suggested a revenue neutral GST rate of 15-15.5 per cent.
The panel has suggested a 40 per cent GST rate on luxury goods and tobacco and 12 per cent for mass consumption goods.
The report was submitted to the finance ministry today.
The committee has also emphasised that the GST rate should not be capped in the Constitution. "We prefer that it is not cast in stone," Mr Subramanian said.
The GST cap announced by the panel is well below 18 per cent that the Congress had demanded as a condition to support the measure.
Eliminating the one per cent additional tax by manufacturing states is also a Congress demand, which the government may eventually accept.
The arbiter on the final rate will be the GST council headed by Finance Minister Arun Jaitley, which includes all state finance ministers as members.
The Congress may object to the government refusing to add the GST rate to the Constitutional amendment, which will make any change in the future a long and tedious process.
"The panel was originally supposed to give its report around September. There were delays because wide-ranging inputs and suggestions were required," said a government official who declined to be named.
The panel has suggested what is known as a revenue-neutral rate as agreeable to all stakeholders as possible. A revenue-neutral rate means no revenue loss to the Centre or the states.
The GST regime is expected to club state levies into a single tax regime and integrate the country into a common market by removing barriers across states.
The government wants to implement GST by April 2016, but the deadline may be missed if Parliament does not pass the constitutional amendment bill in the winter session. The government needs to support of the Congress in the Rajya Sabha, where it is in a minority.
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