The National Institute of Public Finance and Policy (NIPFP),
a fiscal policy think-tank, has said that the combined
goods and services tax rate for Centre GST and the State
GST should be about 17-18 per cent.
“We have submitted a note where it has been
suggested that the combined GST (central GST and State
GST) should be 17-18 per cent”, Dr M Govinda Rao,
Director, NIPFP, said here at an industry event. This
suggested rate (17-18 per cent) is substantially higher
than the 12 per cent (centre-5%, States-7%) recommended
by a Task Force set up by the Thirteenth Finance
Commission.
Both the Centre and the State Finance Ministers are yet
to arrive at a consensus on what the rates should be
even as the first discussion paper on GST provides a
broad framework for the proposed dual-GST system.
India is looking to implement a dual-GST system – one at
the central level (Central GST) and the other at the
state level (State GST).
Moving to a GST regime is likely to broaden the tax base
for both the Centre and the States. The Central GST will
extend up to the retail stage, an improvement over the
current practice of levying cenvat (excise) only upto
the manufacturing stage. Also, States are expected to be
allowed to levy State GST on services. Necessary
constitutional amendments are likely to be undertaken in
the upcoming budget session of Parliament.
Meanwhile, State Finance Ministers are likely to meet on
January 7 under the aegis of the Empowered Committee to
discuss the vexed issue of State GST rates. Indications
are that the State Finance Ministers will also discuss
the recommendations of the Task Force of the Thirteenth
Finance Commission.
