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CEA opposes 1% tax levy above GST by States. The government needs to reconsider levy of one per cent additional tax by states over and above GST rate as it could make inter-state movement of goods expensive and hurt the \'Make in India\' campaign, Chief Economic Advisor Arvind Subramanian said.
Says will make inter-state goods movement costly
The irony of such an additional tax is that it would favour international trade over intra-national trade, because every time a good passes a border it has to be an extra non Vat-able tax
- Suggests to reconsider to levy additional tax by states
- It is levied to address concerns of manufacturing states
- Govt plans to roll out GST from April 2016
- It is a destinationbased levy to help manufacturing states make good the loss of revenue
Arvind pitches for rate cut
Citing low inflation and under control fiscal deficit, Chief Economic Advisor Arvind Subramanian pitching for a rate cut by RBI at its monetary policy review meeting next week. He also said that India needs to take action to keep its currency competitive in view of aggressive rate cut policy of China and other countries. "Looking at the analysis of what is the inflation forecast, what is the fiscal consolidation, what is the international environment.
And how monetary policy should respond, I think there is scope for monetary easing," he said. The Reserve Bank is slated to announce its second bi- monthly policy on June 2 during which the central bank will take a call on interest rate taking into account inflation and other economic parameters. "Inflation...Is going to be lower than the RBI's target. Fiscal policy is supportive and that (will have) implications for interest rates going forward," Subramanian said.
New Delhi : The government needs to reconsider levy of one per cent additional tax by states over and above GST rate as it could make inter-state movement of goods expensive and hurt the 'Make in India' campaign, Chief Economic Advisor Arvind Subramanian said. "Think of a good going from Gujarat to Tamil Nadu, crossing four states. The good would embody an additional tax of about 4-5 per cent, because it is 1 per cent every state. That might make it easier to import into Tamil Nadu from Bangkok," Subramanian told reporters here.
In order to address concerns of the manufacturing states, the GST Constitution Amendment Bill has provided for an additional one per cent tax for a period of two years. As Goods and Services Tax (GST) is a destination-based levy, it would help the manufacturing states make good the loss of revenue. "It (1 per cent additional tax) has the potential to undermine Make in India. That is why we need to look at this provision carefully. This period that we have gained, some of these issues need to be looked at again," Subramanian said.
The Constitution Amendment Bill to roll out GST has been referred to Rajya Sabha Select Committee which is expected to submit its report at the beginning of the next session of Parliament. Lok Sabha has already cleared the Bill. The government plans to roll out GST from April 2016. The irony of such an additional tax is that it would favour international trade over intra-national trade, because every time a good passes a border it had to be an extra non Vat-able tax. GST, being touted as the most significant reform in indirect tax, will subsume various levies including excise, service tax, state VAT, entry tax, octroi and other state levies.
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