GST rate will be much more diluted than 27%: Jaitley

Revenue Neutral Rate (RNR) is the rate at which there will be no revenue loss to the states after GST implementation.

May 06, 2015 03:28 pm | Updated November 17, 2021 02:09 am IST - New Delhi

The GST rate will be “much more diluted” than the speculated 27 per cent and the final rate will be worked out by the GST Council, Finance Minister Arun Jaitley said on Wednesday.

“I straightaway concede that 27 per cent would be very high...after this 27 per cent (Revenue Neutral Rate) was born, the states and the Centre have decided to keep alcohol out,” he said in a reply to GST Bill debate in the Lok Sabha.

“We have decided to keep petroleum out and every state finance minister is not interested in imposing higher taxes on its own people, and neither the central government. Therefore, this figure (RNR) is going to much more diluted compared to the figure (27 per cent) which has been mentioned,” he said.

Revenue Neutral Rate (RNR) is the rate at which there will be no revenue loss to the states after GST implementation.

“These are the figures which would be decided by GST Council,” he added.

The GST Council will have Mr. Jaitley as its Chairman and comprise two-third of members from states and one-third from the Centre.

The GST is termed as the biggest indirect tax reform since 1947. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.

Allaying concerns raised by some of Lok Sabha members regarding the 27 per cent RNR speculation, Mr. Jaitley said “it is going to be too high and therefore the cost and prices itself will go up”.

He clarified to the House that the number was not given by the government or the GST Council but by a particular organisation in its own internal assessment.

“It got leaked out and somebody said it is 26.8. so that is how this figure of 27 per cent was born,” he said.

However, without hazarding a guess as to what the final GST rate would be, Mr. Jaitley said, the 13th Finance Commission had suggested 18 per cent as a possible figure.


0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.