Outgoing Chief Economic Adviser Arvind Subramanian said on Wednesday that removing the 28% tax slab under the Goods and Services Tax and having a uniform rate of cess should be the first step to simplify the indirect tax structure, The Indian Express reported. Subramanian had announced last week that he would leave the Finance Ministry soon.
“I think the 28% rate has to go,” Subramanian said at the newspaper’s Idea Exchange programme. “The cesses may have to remain, but there should be just one rate on cesses...Today, we have GST rates of zero, 3%, 5%, 12%, 18% and 28%. We need to rationalise but I think at the first instance the 28% should go.”
His comments come days before the first anniversary of the GST regime.
The cesses may need to remain because some products need higher rates, he said, but added “there shouldn’t be multiple rates even here”. “In my report, we had called for one 18% rate and then 40% rate,” he said. “Cesses are a different way of implementing the 40% rate.”
Subramanian said “stigmatised capitalism” was an obstacle to reforms, as were rising crude oil prices.
“The fact that it is getting very difficult to make decisions that involve bringing in the private sector...in this atmosphere of stigmatised capitalism, public sector officials are finding it difficult to take decisions because of the fear that, at some point, it will be questioned or investigated,” he said.
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