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Panel suggests standard GST rate of 17-18 per cent

04 December, 2015

The panel headed by chief economic advisor Arvind Subramanian submitted its report on the Goods and Services Tax recommending a standard rate of 17 to 18 per cent for GST, it said on Friday.

While the report by the panel highlighted a revenue neutral rate of 15-15.5 per cent for GST putting to rest speculation in the market of the rate being over 20, Arvind Subramanian said the standard rate of 17-18 per cent was recommended by the panel.

The report shall also put to rest demands by the Opposition of a lower rate. While most Opposition parties like BSP and JD(U) had agreed to the GST legislation, Congress, which is the largest party in the upper house Rajya Sabha and controls the swing vote was still protesting on certain issues.

The report also put to rest speculations regarding inter-state tax which many had believed will be detrimental for the growth of business. The panel headed by Arvind Subramanian recommended an elimination of all taxes in inter-state trade including the 1 per cent additional tax proposed in GST Bill.

The road ahead

With most of the recommendations of the panel in sync with demands of the Opposition, the bill is expected to see the light of the day in Rajya Sabha.

While the government had passed the law last year and announced the 

implementation of the GST bill by April 2016, it was finding it difficult to clear the legislation given the protests by Opposition.

As rate and revenue sharing are yet to be decided, the road ahead may not be so smooth for the government.

The panel’s recommendation of bringing alcohol and petroleum within the GST purview may not find many takers. The government will have to get ratification of more than 20 states in order to implement the reforms on petroleum as most of these revenues accrue to the state.


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Panel suggests standard GST rate of 17-18 per cent

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