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.
â€œIn 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?â€� 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 stabilisesÂ the 28 percent slab can go.
â€œI 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,â€� he said.
He further said GST is still a 'work in progressâ€™ and fewer rates, aÂ wider tax base is of fundamental importance.
â€œMy 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,â€� he said.