Indirect taxes lessen tax burden

Tribune News Service

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Chandigarh, February 11

As the global average of the Goods and Services Tax (GST) rate is 16.4 per cent, indirect taxes in India are as high as 28.2 per cent to 30.8 per cent. This helps in decreasing tax burden on the consumers.

This was stated by noted fiscal economist and Member, Board of Directors, Reserve Bank of India, Prof Indira Rajaraman, while delivering a colloquium on the topic ‘Goods and Services Tax: What and how?’ at Panjab University today.

The colloquium was organised in collaboration with the Department of Economics, PU.

PU Vice Chancellor Prof Arun Kumar Grover was also present on the occasion.

Member of the Thirteenth Finance Commission, Prof Rajaraman advocated the GST and described it as an important tax reform that would place the country on a higher growth trajectory.

“The GST would replace the Excise Levy and Service Tax at the Centre and VAT on the Goods and Sales Tax (CST) of the states, which all have cascading effects,” she added.

Prof Rajaraman said the GST would require a Constitutional Amendment.

Obliquely referring to some opposition to the GST, Prof Rajaraman said every structural reform draws a battle line between immediate winners and losers but eventually all must win. “Industrial producing states for locational or historical regions stand to lose 2 per cent CST on inter-state sales and some other states such as Punjab, Haryana and Maharashtra would lose the purchase taxes levied on foodgrains and oil. However, the compensation for revenue loss has been included in the Constitutional Amendment Bill 2014, as a transitory arrangement,” she added.

Referring to various developments on the GST, Prof Rajaraman said, “The GST Constitution Amendment Bill was introduced in the Lok Sabha in 2010, which lapsed and had to be replaced.

The Constitution Amendment 122 was introduced on December 19, 2014. The Amendment creates a GST Council, which would decide on the rate structure and other parameters so that the Parliament does not have to be approached every time a change is needed.”