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  3. GST will cut inflation by 2%; create buoyancy in economy: Adhia

GST will cut inflation by 2%; create buoyancy in economy: Adhia

22 May 2017 Evaluate

Revenue Secretary Hasmukh Adhia has said that implementation of the ‘game-changing’ goods and services tax (GST) regime will cut inflation by around 2 per cent and it will also create buoyancy in the economy through better compliance and ease of doing business.

Talking on the rates have been fixed by GST council, Adhia said that incidence of taxation has come down in many and remained at the same level as now in most of the remaining goods and services. He pointed out that inflation will not at all go up because of GST as they have taken special care to ensure inflation does not go up. He noted that their internal estimate is that after the rates are decided, inflation should come down by 2 per cent.

The revenue secretary has said that while the current indirect tax regime suffers from significant cascading, which leads to higher cost of goods and services, a free flow of credits across transactions under the GST framework will bring down the tax cost for businesses. He also said that taxpayers or consumers currently have to pay both the Centre and state taxes on a single sale, which adds to increased costs for businesses and consumers. He added that such an increase in costs adds to the inflationary pressure.

Meanwhile, the all-powerful GST Council headed by the Finance Minister has assigned tax rates to more than 500 services and 1,200 goods by setting them in five broad rates of 5, 12, 18 and 28 per cent. Council will meet again to decide on tax rates of contentious such as gold, bidi and biscuits for its rollout from July 1. GST will be a single nation-wide sales tax replacing a string of central and state levies.

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