Apex Indian industry body, ASSOCHAM is pleased with the report of Chief Economic Advisor (CEA) led panel recommending standard GST rate of 18 per cent and lower rate of 12 per cent on specified goods.
In a press release, ASSOCHAM stated that the rate structure is appropriate and will be anti-inflationary for indigenous goods. However, the cost of services will go up including some essential services like banking, telecom and Information Technology (IT).
ASSOCHAM’s press release revealed that the CEA panel has also suggested highest rate of 40 per cent on sin and luxury goods but there is no specification on which items will be identified as luxury goods. In such a situation, it is feared that list of such goods may be expanded by including large number of commonly used items by the mass consumers, which is undesirable. And such higher rate should only be applicable to sin goods.
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The release stated that the industry body has always been advocating dropping the proposed 1 per cent additional tax and levy moderate GST rates on all tradable goods and services, therefore the chamber fully supports the recommendations of the CEA-led panel to include petroleum products alcohol into the ambit of GST.
The removal of 1 per cent additional tax is a positive step as it will remove the cascading effect on cost of indigenous production by four to six per cent as goods move four to six times during entire value chain.
ASSOCHAM showed full support to the CEA’s view that the rates can’t be put in the Constitution Amendment Bill to make the rates inflexible. However, the chamber feels that rates should be stable and predictable to attract investments.
