CGST law provides that any reduction in taxes shall be passed on to consumers
The total state levies on the basic grain purchase price — not counting the 2.5 per cent fee payable to commission agents (arhtiyas) — thus comes to 12 per cent.
The GST council has fitted the goods and services in tax bracket of 5, 12, 18 and 28 per cent. Tax experts said that a rise in tax rate for telecom and financial services is likely to hit consumers.
Luxury hotels, gambling, race-club betting and cinema services will attract a levy of 28 per cent.
GST is likely to strengthen cooperative federalism and have far-reaching implications for growth, inflation, public finances, says the RBI report.
The compensation would be met through levy of a cess called ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first five years.
Currently, goods attract an effective tax rate of 24-25 per cent (including both the central and state levies), while services attract a levy of 14.5 per cent.
Congress sources said that the party can consider proposals from the government on the dispute redressal mechanism.
The National Institute of Public Finance and Policy had suggested a revenue neutral rate of 27%, which was considered high by the Centre.
The BJP has the ammunition to pass the GST bill — most importantly, the promise of a revenue neutral GST tax rate of 11 per cent, which a task force set up by the Congress had first proposed in 2009
Select committee also makes a case for lower GST rate for the banking industry to maintain the competitiveness of the industry globally
‘The way to eliminate deprivation is to achieve growth of 8-10% so that jobs are created for all’
The committee would “recommend possible tax rates under GST that would be consistent with the present level of revenue collection of Centre and states,” an official statement said.
States also want exemption of entry and purchase tax from the ambit of the goods and services tax.
Gadkari has come under fire for his past association with a private company which CAG has alleged of non-compliance of conditions to obtain a govt loan.