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LATEST NEWS UPDATES | Slabs are still numerous

Slabs are still numerous

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published Published on Jun 4, 2017   modified Modified on Jun 4, 2017
-The Telegraph

New Delhi: The goods and services tax (GST) regime has replaced a cascade of 11 central and state taxes with a concertina of eight tax rates, defeating the original idea of having a three-slab tax structure.

The current GST structure on goods ranges from zero to around 40 per cent. If jute, silk and muri (puffed rice) fall in the exempted category, luxury cars and SUVs fall in the top bracket because of the cess that will top of the demerit rate of 28 per cent.

In his report submitted in December 2015, chief economic advisor Arvind Subramanian had advised a modified two-rate structure with a standard rate of 18 per cent and a lower rate of 12 per cent. Luxury cars and cigarettes, he had said, could be taxed at a much higher demerit rate.

"Ideally, the GST should aspire to a single rate, which would then also be the standard rate. Since 2000, about 90 per cent of countries that have adopted a VAT regime have chosen to have a single rate. The tax administration benefits of having a single rate are substantial. However, in the years ahead, it may not be feasible to adopt a single rate GST system for social reasons," Subramanian had said, which is why he suggested a basic two-rate structure with a demerit category of goods.

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The Telegraph, 4 June, 2017, https://www.telegraphindia.com/1170604/jsp/frontpage/story_155096.jsp


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