Govt bends on GST rate; to peg it between 19-20%

 The Goods and Services Tax (GST) rate, a major bone of contention in the passage of the historic tax reform, will not go beyond 20 per cent.

“GST rate will be in between 19 and 20 per cent and care will be taken that it does not hurt manufacturers,”  a senior government official closely involved with the preparation of GST rollout, told Deccan Herald. He said the government is ready on its part for the rollout and awaiting the Parliament nod. Internationally, GST rate ranges from 16-20 per cent with a few exceptions like Australia, Japan and Germany where the tax levied is much lower.

In India, the bill has hit a roadblock on three main issues. First, the revenue neutral rate or GST rate, which the Opposition Congress says should not be more than 18 per cent.
The second major issue is the ruling NDA’s decision to exclude alcoholic liquor and petroleum products from the final GST draft. And, the third is the decision to give states power to impose additional one per cent tax over and above GST.

There were murmurs after the Monsoon Session of Parliament that the GST rates were going to be around 27-28 per cent. The opposition had vociferously reacted to that. Subsequently, Finance Minister Arun Jaitley made it clear that the government was not in favour of keeping the GST rate high.

 Last week, Jaitley also met the Congress President Sonia Gandhi and Vice President Rahul Gandhi. Though the meeting was ostensibly in connection with his daughter’s marriage, it sparked speculation on whether the finance minister sought their help to get the GST passed. The biggest indirect tax reform since independence, the GST is expected to add close to two per cent to India’s GDP.

'Knotty' GST

GST rate will be in between 19 and 20 per cent 
Globally, the GST rate ranges from 16-20 per cent  The bill has hit a roadblock in India
It is expected to add two per cent to India' GDP