Too many tax slabs will distort GST: CAIT

The Economic Times By ET Bureau Oct 18, 2016, 10:33 AM IST

NEW DELHI: A day ahead of the crucial three-day meeting of the Goods and Services Tax (GST) Council to decide on rates, a key traders' body has pitched for minimal tax slabs under the proposed tax regime.

"Too many tax slabs will distort GST," the Confederation of All India Traders (CAIT) said a statement on Monday.

GST Council, a body of Centre and states, will meet on Tuesday to decide on rate of tax. The CAIT said that too many tax rate slabs under the GST regime will not only distort the single tax fabric but will also lead to complications, making voluntary compliance a difficult task.

The traders' body urged the GST Council to keep the standard rate tax slab at not more than 18% and hoped that such a tax slab will augment more than sufficient revenue for the Centre and the states. The single GST rate should not be more than 35%, else it will prove to be counterproductive, CAIT cautioned.

The body wants stakeholders to be consulted before finalising items falling under the exempted category and the zero rate category as zero rate tax slab would allow for input credit.

CAIT also asked the GST Council to decide on a definite roadmap to educate and train the traders with compliance formalities of GST to empower them to deal with the new framework.

The CAIT has already launched a nationwide campaign in association with Tally Solutions, a software product company, to train the traders about required technology but support of the government is all the more important to reach out to people within a short time.

The finance minister-headed GST Council will decide on the rates, the remaining issue of oversight of service tax assesses and issue of compensation to states.

DECISION ON RATES The finance ministry has set itself November 22 as the deadline for building consensus on all the issues related to GST regime.

The government is keen to keep the rate low so that it does not stoke inflation.

A panel headed by Chief Economic Advisor Arvind Subramanian had suggested 17-18% as the standard GST rate, one that would apply to most goods. It suggested 2-6% rate for precious metals, 12% rate for select ones and 40% rate for demerit ones like aerated beverages, pan masala and tobacco.

Once the details are finalised, the government will move a GST law for the consideration of parliament. The government has already put out GST rules for stakeholder feedback.

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