Rahul Gandhi: 18% GST rate is pro-poor, pro-industry

New Delhi, October 18: As Goods and Services Tax Council meets here to decide on key GST issues including rates and service tax assessments, Congress vice-president Rahul Gandhi on Tuesday reiterated that Council should cap tax rate at 18 percent or lower so that the poor are not unduly burdened.

 

In a 3 day meeting of GST Council that began today, it is likely to reach a conclusion on the tax rate and related issues including compensation formula to roll out new tax regime from April 1 next year.

Before the meeting a government official had said: We are currently looking at four tax slabs, with the highest incidence of tax at 26 per cent. It is lower than the 40-per cent rate proposed for very limited demerit items (by a committee led by the Chief Economic Adviser, Arvind Subramanian). A lower rate of 26 per cent can be imposed on more items. This will address concerns of the states, too.

While in the previous meeting last month, the council had reached a consensus on five draft rules relating to registration, payment, refund, returns and invoices of debit and credit notes.

Now if the government proposes a four-tier tax structure under the goods and services tax it contradicts the sole purpose of introducing the GST tax as termed by PM Modi in the parliament as “one country one tax.”

Next, with current outcomes, almost 20 to 25 per cent of all taxable goods would be under the peak slab and would affect the middle class drastically.

The issue raised by Congress vice president is in sync with the common interest of masses as higher rate would escalate the inflation. The Congress has overtly supported the central government in implementation of the GST, except the two parties could not reach consensus on 18% rate.

A discussion paper however is believed to have proposed a standard rate of 18 per cent. Anything above this rate is going to effect the inflation.

Earlier too RBI noted that “the impact on consumer price inflation is likely to be moderate if the standard GST rate is at 18 per cent – in fact, overall price levels may go down due to more efficient allocation of factors of production.”

The apex body also noted that if the rate is increased to 22 per cent it would cause 0.3-0.7 per cent increase on aggregate inflation in select groups like healthcare.

“As the standard rate increases from 22 per cent to 26 per cent and 30 per cent, the impact on CPI would increase from 0.6- 1.3 per cent and to 1.0-1.9 per cent respectively,” RBI had said.

Thus it would be interesting to watch out if the council could reach out to a rate that evades “tax terrorism” and keeps interests of states, common man and industry all at the same time.

Wefornews Bureau

 

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