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Chief Economic Adviser Subramanian says three-tier GST structure possible

11 July, 2018 3:01 PM
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Chief Economic Adviser Subramanian says three-tier GST structure possible

Chief Economic Adviser Arvind Subramanian Wednesday said a three-tier structure under Goods and Services Tax (GST) is possible, ruling out a single-rate tax system.

“In India, we can never have one rate. I had recommended a standard rate and one for demerit good, one for...I think in India the debate should be about why can't we have three rather than why not one?� Subramanian said at the India Policy Forum, 2018.

Currently, GST has four broad tax slabs- 5, 12, 18 and 28 percent-- and three percent tax on gold and other precious stones.

Subramanian, who recently announced his decision to resign, said once revenue collection stabilises the 28 percent slab can go.

“I think over time we will see simplification. For example, once the revenue stabilises, 28 percent can (go away). Cesses can be simplified, but the broader point I want to make is that can't we have at three. That's what we should ask for,� he said.

He further said GST is still a 'work in progress’ and fewer rates, a wider tax base is of fundamental importance.

“My own view is the more you rely on the carrot, and less you rely on sticks, you facilitate formalisation of the economy. That's what I like about GST. It is not heavy-handed. It's a kind of self-policing,� he said.


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