FM Open to Scrapping 1 Percent Additional Tax for Passage of GST

Published: 17th December 2015 04:56 AM  |   Last Updated: 17th December 2015 04:56 AM   |  A+A-


NEW DELHI: Finance Minister Arun Jaitley on Wednesday hinted at accepting Congress stand on scrapping of one per cent additional tax, and that Good and Services Tax rate could be much less than 18 per cent recommended by Arvind Subramanian panel.

The Opposition has been stalling passage of the GST Bill as it demands that the government to cap the rate of GST at less than 20 per cent, scrap a proposed state levy and create an independent mechanism to resolve disputes on revenue sharing between states.

Speaking at an industry meet on GST, Jaitley said the one per cent additional tax on inter-state sales was proposed as manufacturing states like Gujarat and Tamil Nadu were of the opinion that they, having spent money on putting up infrastructure, would lose on revenue as GST is more of a destination tax.

“I have told my friends in Parliament that I am ready to go back to those manufacturing states and tell them that we have guaranteed you to make good for all the loss suffered in the first five years. So this one percent additional levy issue is resolvable,” Jaitley added.

While the new tax is widely expected to add up to two percentage points to economic growth by supplanting a complex tax structure that inflates costs for businesses, it has been languishing in Parliament since last December.

Jaitley also said standard rates under the new tax would be less than 18 per cent, in a bid to address the Congress party’s concerns that a higher tax rate would be inflationary, make businesses uncompetitive and encourage tax evasion. “India is now committed to have a very reasonable standard rate,” he said.

Earlier the government-appointed panel, headed by Chief Economic Adviser Arvind Subramanian, suggested various bands of GST rates starting from 15 per cent as lower rate.


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