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NITI member bats for 2 GST slabs

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Frequent rate changes cause problems, annual review okay, says Ramesh Chand

Government think-tank NITI Aayog Member Ramesh Chand on Wednesday made a case for only two slabs under the Goods and Services Tax (GST) regime as against the current multiple slabs, and said rates should be revised annually, if required.

The GST, which replaced almost all the indirect taxes, came into force on July 1, 2017 and the tax rates have been revised several times since then.

Currently, there are four GST rate slabs — 5%, 12%, 18% and 28%. Several items fall in the exempt or nil duty category. Besides, cess is also levied on five goods.

Teething problems

Mr. Chand said that when a large taxation reform such as GST is brought in, there are always ‘teething problems’ but soon they stabilise. He said most of the countries took a long time for GST stabilisation.

The NITI Aayog Member, who looks after the agriculture sector, is also strictly against frequent changes in GST rates as it leads to problems.

The GST Council, presided over by the Union Finance Minister and comprising State Finance Ministers, decides the rates for particular goods and services.

Besides frequent demand for reduction in the rates on various goods and services, there has also been a clamour for a slash in the number of tax slabs.

“It has become a tendency of every sector to ask for lower GST. I feel GST issues are much larger than asking for rates,” Mr. Chand said.

And, “we should not fiddle with rates or change rates frequently... We should not have many rates. Have only two rates,” he said.

Mr. Chand said the focus should be on steady increase in revenue collection from the new indirect tax regime rather than tinkering with rates. He prescribed that if at all rates needed to be changed, it should be done annually.

On demands for lower GST on processed food such as dairy products, Mr. Chand, an agri-economist, said the 5% GST on such products was “very, very reasonable.”

Mr. Chand said that while every sector was demanding a lower rate, they should also understand governments need revenue to spend on development works.

“We always ask from the government and forget to give back. This trend is not good. From where will the government get the money to spend for development?” asked Mr. Chand, who is also a member of the 15th Finance Commission.

He said in the agriculture sector alone, the Central government was providing a subsidy of ₹1.2 lakh crore and the States, put together, spend about ₹1 lakh crore.

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Printable version | Jan 19, 2020 1:28:30 AM | https://www.thehindu.com/business/niti-member-bats-for-2-gst-slabs/article30398021.ece

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