'Secrecy in GST decisions not good for tax reform'

Days ahead of the GST Council meeting on February 18, which is expected to finalise model GST laws, the National Institute of Public Finance and Policy, a research body under the Ministry of Finance on Monday warned over the level of secrecy on GST decisions.

It said the level of secrecy was not conducive for tax reform like GST which will touch upon day-to-day economic activities of all sectors of the economy.

“Decisions of the GST council are not disclosed in the public domain by the Council and there is hardly any informed public debate on these issues,” said NIPFP associate professor Sacchidananda Mukherjee in a research note.

“With the passage of the Constitution 122nd Amendment Bill in the Rajya Sabha in August 2016, and the setting up of GST council, many hoped that the design and structure of Indian GST will be taking shape soon. However, instead, the basic structure of GST has weakened with the proposal to levy multiple GST rates and cess,” he said. “Like earlier instances, decisions of the GST council are not disclosed in the public domain by the Council and there is hardly any informed public debate on these issues,” Mukherjee said.

Classification disputes

The remark assumes importance as in the week when the GST Council is expected to approve the model GST laws paving its introduction in Parliament.

He also warned that the multiple rate structure under the proposed GST will lead to classification disputes.

“The present discussion on GST tax rate shows that there will be four different tax rates ranging from 5% (on gold and precious jewellery) to 28% (on demerit goods like luxury cars, tobacco and tobacco products). Present discussion on two standard GST rates (12% and 18%), a lower rate (5%) and a higher rate (28%) in addition to exemptions will make the design of GST complicated tax administration,” he said.