Industry stakeholders on Tuesday settled on 18% as the Goods and Service Tax rate and said that the number will facilitate appropriate tax buoyancy without increasing inflation. They also demanded that the penal provisions on the tax be relaxed and told state finance ministers in a meeting that the April 1, 2017, deadline for the GST tax rollout would be a challenge, PTI reported.
Confederation of Indian Industry President Naushad Forbes said, "We believe a maximum rate of 18% as standard rate will be revenue neutral and ensure adequate tax buoyancy. The Centre has agreed for full five-year compensation for revenue loss to states, so 18% rate will be more than adequate."
The Federation of Indian Chambers of Commerce and Industry recommended that the rate be reasonable and restrict inflation growth. FICCI officials said, "Goods fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime as well."
Forbes said CII will work towards the deadline. He said, "If we work towards that deadline and if we have clarity on some of the provisions as early as possible, we can ensure that our own IT systems are put in place quickly so that we can go live as early as possible," Forbes said.
The Associated Chambers of Commerce of India, however, asked for relief from the penal and prosecution provisions in the two years that follow the tax roll out with an exception for cases of tax fraud and non-deposit of collected taxes. The body has requested the central and state governments advise traders on the provisions of the tax after it comes into effect.
Stakeholders have asked for a single-window clearance for registration of suppliers of services, particularly those that work out of several states. Chairperson of the Empowered Committee of State Finance Ministers and West Bengal Finance Minister Amit Mitra said the concerns raised would be addressed.
The GST was approved by the Parliament earlier this month. The uniform tax will encompass excise, service tax and local levies, including VAT and octroi.