Gst above 27% will not serve purpose: centre

Mumbai : The discord between the Centre and states over the contours of the Goods and Services Tax (GST) seems hard to be reconciled. The Centre, which has agreed to provide constitutionally-guaranteed GST compensation and keep petroleum products out of the proposed comprehensive indirect tax in the initial few years to address the states’ concerns, is peeved at their new demand that the combined GST rate should be above the revenue neutral rate (RNR) of 27% projected by a designated think tank for most transactions.

The central government is concerned that a higher GST rate could rob the country of the potential economic gains from the multi-point, destination-based tax. Stating that a steep GST rate could dent compliance, particularly at the retail level, a Finance Ministry official told “GST implementation is supposed to bring down the indirect tax burden (on businesses). A rate above what is currently applied would defeat the very purpose of GST,” Finance Ministry said.

Source: Daily Shipping Times