Apex industry body, The Associated Chambers of Commerce of India (ASSOCHAM) has welcomed the report of Chief Economic Advisor (CEA) Arvind Subramanian- led panel recommending standard GST rate of 18 percent and lower rate of 12 percent on specified goods stating that this rate structure is quite appropriate and will be anti-inflationary for indigenous goods, though the cost of services will go up including some essential services like banking, telecom and information technology (IT).
Further, ASSOCHAM said that the removal of one per cent additional tax is a welcome step as it will remove the cascading effect on cost of indigenous production by four to six per cent as goods move four to six times during entire value chain and said that the higher rate should only be applicable to sin goods. ASSOCHAM fully supports the CEA`s view that rates can`t be put in the Constitution Amendment Bill to make the rates inflexible, however the chamber feels that rates should be stable and predictable to attract investments.
A key government committee headed by Arvind Subramanian on goods and services tax (GST) has suggested a standard GST rate of 17-18 percent and dropping of the one per cent additional tax on inter-state sales. It recommended 12 percent for 'low rate goods' and 40 percent for demerit goods. For precious metal, it recommended a range of 2-6 percent. Also, the panel recommended early inclusion of alcohol and petroleum products in GST, stating that bringing alcohol and real estate within the scope of the GST would further the government's objectives of improving governance and reducing black money generation without compromising on states' fiscal autonomy.