EAC-PM for single rate GST, taxation without exemptions

New Delhi, November 7

Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Bibek Debroy on Monday said India should have a single rate GST and taxation regime devoid of exemptions. He said the tax collection of the Centre and states combined was just 15 per cent of GDP, while the demand for government spending on public infrastructure was much higher.

“On GST, there should be a single rate. I don’t think we will ever get it…,” Debroy said at an event here. If the differential tax rates for products of ‘elitist nature’ and those of mass consumption were done away with, it would lessen litigation, he added.

“As a polity, we need to recognise that the GST really should be the same regardless of the product. If progressivity is to be introduced, it is best done by direct taxes, not GST, or indirect taxes,” Debroy noted. He also clarified that his speech should not be construed as a recommendation of the EAC-PM.

The estimate of the GST revenue neutral rate by the Department of Economic Affairs before the GST rollout was 17 per cent, but the average GST rate at present is 11.5 per cent, he added.

“We must be willing to pay tax or we must be willing to settle for reduced delivery of public goods and services,” he said, adding the revenue foregone because of exemptions by the government was 5-5.5 per cent of the GDP.

Only a submission

Revenue foregone because of exemptions by the government is 5 to 5.5% of GDP… My speech should not be seen as recommendation of the EAC. — Bibek Debroy