GST: Govt panel for removing tax on inter-state trade

New Delhi: To achieve a middle path on the long due Goods & Services Tax (GST) bill, a government panel headed by Chief Economic Adviser Arvind Subramanian suggested the one per cent additional origin tax for manufacturing states recommended to be levied on the GST, specifically on the inter-state trade of goods to help manufacturing states. This is one of the foremost demands of the Congress and the suggestion might help the BJP-led NDA Government to crack this gridlock in Parliament.

In a report submitted to Finance Minister Arun Jaitley on Friday by the authorised committee recommended changes on the main GST rate to be in the range of 16.9-18.9 percent. The rates endorsed a revenue-neutral rate (RNR) of 15-15.5 percent, with an average rate of 17-18 per cent, should be levied on majority goods and services.

The average rate will be implemented on majority goods and services in the new indirect tax regime. These tariffs were deliberate after eliminating real estate, electricity, alcohol and petroleum products.

The demands put forth by Congress' comprise 18% GST rate to be legislative and doing away with 1% additional origin tax for manufacturing states- Gujarat, Maharashtra and Tamil Nadu. They had also demanded an independent dispute resolving body for GST.

"The idea of not putting rate caps (of 18% as suggested by Congress) in the Constitution is pragmatic, considering the dynamic business environment which may demand future changes in the GST rate. Recommendation towards wider coverage of sectors (including petroleum) within GST is much desirable in the interest of a cleaner indirect tax regime," said Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, to a newspaper.

The Constitution Amendment Bill, prevalently recognized as the GST bill, is pending approval in the Rajya Sabha due lack of the majority of the leading government. The government is nonetheless working towards negotiating and finalizing the work by March 31 next year to enable GST's roll out from April 1, 2016.