New Delhi: Amid fears of revenue loss and claims for central compensation after GST roll out, the government on Wednesday formed a committee headed by chief economic adviser Arvind Subramanian to relook at the proposed revenue neutral rate of 27 per cent, which Finance Minister Arun Jaitley conceded to be “very high”.
Keeping in mind the GST roll out deadline of April 2016, the finance ministry set up the panel to recommend a revenue neutral GST that will be acceptable to all stakeholders.
The committee will also be tasked with identifying the impact of the change in the indirect tax regime on a state-wise and central level. The committee has been asked to submit its recommendations within two months.
The Committee will have its task cut out, particularly as the states do not levy tax on services. The disparity in the levels of tax on goods and services under the present indirect tax regime is another major hurdle which the Committee will face while attempting to arrive at the final GST rate.
In the past, the NIPFP was mandated to suggest a revenue neutral rate. But the proposed GST rate of 27 per cent was deemed to be too high.
A second committee has also been formed after representations from the industry under the co-Chairmanship of the Additional Secretary, Revenue and Member Secretary of the Empowered Committee of State FMs.
The Committee will monitor the IT-readiness of the GST network, and interact with industry and other stakeholders in preparation for the rollout of GST on the optimistic April 2016 deadline.
The Chief Economic Adviser has expressed strong reservations on the GST Constitutional Amendment Bill in its current form especially the 1% origin based additional duty.