GST Bill: Council proposes to raise peak tax rate to 20 pc

The GST Council, headed by finance minister Arun Jaitley and comprising representatives of all states, has agreed to keep the upper band of the rate in the law at 20 per cent.

GST Bill: Council proposes to raise peak tax rate to 20 pc

In the model of Goods and service tax(GST) Bill, the GST council has proposed to raise the peak tax rate to 20 per cent, from the current 14 per cent. With the change, the GST might go up to 40 per cent.

However, the model GST bill will replace the clause which states the tax rate "not exceeding 14 per cent, with "not exceeding 20 per cent" when it comes up for debate in Parliament during the second phase of Budget session beginning next week. This will, however, not alter the 4-slab rate structure of 5,12,18 and 28 per cent agreed upon last year. It comes only as a provision built into the model law to take care of contingencies in future.

 

Under the revised draft of model GST law, which was made public in November 2016, the maximum rate of tax is 14 per cent (14 per cent central GST and an equal state GST, taking the total to 28 per cent).

"There shall be levied a tax called the central/state goods and services tax (CGST/SGST) on all intra-state supplies of goods and/or services... at such rates as may be notified by the central/state government... but not exceeding 14 per cent on the recommendation of the Council and collected in such manner as may be prescribed," the draft law states.

Officials said this 14 per cent will now be changed to say the rate will not exceed 20 per cent. The GST Council, headed by finance minister Arun Jaitley and comprising representatives of all states, has agreed to keep the upper band of the rate in the law at 20 per cent.

The Centre plans to introduce in Parliament the Central GST (CGST) Bill in the forthcoming session beginning March 9. After it is ratified, the states will introduce the State GST (SGST) Bill in their respective legislative Assemblies.