The Cabinet has approved the set up of the GST (Goods and Services Tax) Council, after the President's approval for the constitutional amendment last week, marks the beginning of the toughest phase in the road to final implementation. The government has set a deadline of 1 April 2017 for the rollout of the indirect tax reform.
States, fearing revenue loss, want to set the rate as high as possible, above 20 percent, while main opposition party, Congress, is adamant on 18 percent GST rate. To meet the April deadline, the GST rate needs to be agreed upon and supporting legislations -- central, integrated and state GSTs -- have to be passed in the coming winter session of the Parliament.
The GST standard rate is crucial since it will broadly be effective for around 70 percent of goods and services and there is no way all can agree on one GST standard rate. The ideal rate, as the government's chief economic advisor (CEA) Arvind Subramanian pointed out time and again is fixing the standard rate closer to 20 percent.
Once the issue of GST standard rate is resolved before the Winter Session and broader contours of the central GST law is agreed, the rest is technicality. April roll out is a possibility then. Else, the process can get delayed in the crucial election year. Fixing the standard rate is a fire test for the GST Council in every sense.
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