Consensus on GST rates is a welcome move

4 November 2016

Pratik Jain, Partner and Leader, Indirect Tax, PwC India

Consensus on GST rates is a welcome move

Consensus on rates of GST is a welcome move and with this the Government seems to be set to push for April 1, 2017 as the date of implementation. While multiple rates may not in line with classical GST system, this seems to be the only practical solution as of now.

Having large proportion of items of mass consumption exempt and remaining under 5% the Government is hoping to keep the inflation in check. However, it is important that 5% and 28% categories only covers select few products. Specifically, 28% slab should not be broad based to cover more products than what has been indicated so far.
Proposal to impose cess on few products continues to be a disappointment. This goes against the philosophy of simplification and rationalization of tax regime. One would hope that Government examines the implications of Cess in more detail and also takes industry's views into consideration. It is not clear as to the likely increase in tax base due to better compliances and overall increase in economic activities leading to additional GDP growth between 1-2% etc. have been factored in while arriving at the amount of compensation to States, for which Cess has been proposed.

Also, the Council needs to debate about the rate of GST on services..

Connect with Pratik Jain on Twitter @pratikdelhi.

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