CEA Arvind Subramanian's 18 per cent GST old hat, says Centre

New Delhi: The Centre on Thursday virtually washed its hands off the CEA  Arvind Subramanian report that standard rate for GST be at 17-18 per cent, saying that the report was based on  old data of 2013 and now new realities had to be looked at while calculating GST rate. Revenue Secretary Hasmukh Adhia said that today most goods are taxed at around 27 per cent and cautioned media against using 18 per cent as standard rate for GST, calling it “pre-mature”.

This may point that GST standard rate is likely to be higher than 18 per cent. Mr Adhia said that Centre is hopeful to get the approval of 16 states within 30 days required for President to notify GST council.  “The calculation which CEA report has done and NIPFP has done, is based on taxable  base of state and Centre as in 2013-14. Since then a lot of things have happened more in  state and Centre level. We need to account for those changes which have happened in  last two years. For example Centre government has come with many more cess in last  two years. So the calculation does not include those cess etc.,” said revenue secretary  Hasmukh Adhia.   

Congress had been demanding a cap in the GST at 18 per cent in the bill  on the basis of Mr Subramanian panel report. Interestingly, Mr Subramanian had given his report in December 2015 only.  However, in the evening CEA said that while a GST rate of close to 22 per cent will put inflationary pressure, higher rate of 27 per cent will become totally self-defeating. “At 27 per cent it is totally self-defeating...Up to 18-19 per cent there will be minimal impact on inflation and if it goes to 22 per cent there will be a few basis point increase,” Mr Subramanian warned.

Mr Adhia said that 85 per cent of the revenue of the Centre come from items which are taxed at 12.5 per cent rate of excise duty. Similarly, he said 62 per cent of VAT revenues for states is coming from their standard rates which is at present at 14.5 per cent.

“So 65-70 per cent of revenue of state and Centre is coming from those items where the total tax incidence is 27 per cent. Now to what extent you could bring (down) this 27 per cent, by accounting for efficiency gains of GST that is for GST council  and it is also a question of proper calculation. “Unless we  have done our calculation right, it will be difficult for the government to talk about any rate,” said Mr Adhia. “In today’s newspapers most have given examples how prices of different items will come down,”  he added.    

60k officers to be trained on GST; software by April:

As many as 60,000 revenue officials of central and state governments will be trained on GST laws and IT infrastructure framework to prepare them for rollout of the new indirect tax regime by April 2017. As per the detailed Goods and Services Tax (GST) rollout road map prepared by Revenue Secretary Hasmukh Adhia, the IT infrastructure framework will be ready by March 2017 and a massive outreach and industry sensitisation programme will also be carried out.

After the training on GST laws gets complete by December 2016, GSTN will train them on the related IT infrastructure by March 2017. Goods and Services Tax Network (GSTN) is a non-government company set up by the Centre and states to provide shared IT framework and services to central and state governments, tax payers and other stakeholders. The revenue department has already started stakeholder consultation with the industry in Hyderabad and Jaipur.

The IT network of the Central Board of Excise and Customs (CBEC), banks, RBI, state accounting authorities and states will be ready by December-end 2016, according to the road map and the testing and integration of the IT backbone of all stakeholders is slated for January March 2017. To make life easier in the new regime, the Revenue Department has said no fresh registration will be needed for the existing dealers.