Panel for 17-1 per cent as GST rate, backs scrapping 1 per cent extra levy

The GST panel headed by chief economic adviser Arvind Subramanian on Friday recommended that the maximum possible tax base under the proposed Goods and Services Tax be taxed at the standard rate, that it proposed be kept at 17-18 per cent. It also recommended a revenue-neutral rate of 15-15.5 per cent and backed scrapping the controversial proposal for an one per cent additional levy by states on the cross-border transport of goods.

The report may help the Narendra Modi government bring the Congress Party on board to pass the GST Bill as it has met the key demands of the main Opposition party on the tax rate and removing the one per cent additional duty. The committee, however, rejected another key Congress demand that the GST rate be included in the Constitution Amendment Bill.

The proposed 17-18 per cent standard rate is envisaged as a national rate, comprising the sum of Central and state GST rates. How these combined rates are allocated between the Centre and states will be determined by the GST Council.