As the Government of India along with the Finance Ministers of various states planning for a ‘Multiple Rate GST,’ Former Union Finance Minister calls this idea a complete disaster. P Chidambaram on Monday said that the proposed ‘Multiple Rate GST’ structure will be “disastrous” and nothing more than same old VAT rates in a “new shape”.
“We sincerely hope that we do not misinterpret the design of standard, standard minus and plus rates of GST. We can have 20 rates. It will be disastrous and that cannot be GST, it will be fooling the country,” Chidambaram told an interactive session with IIM Calcutta students on economic reforms.
He Explained his point of view on Multiple Rate GST with the facts and that makes a lot of sense.
He said that “A well designed GST is expected to have standard rate, plus and minus standard rate. That latitude interpreted to me as multiple rate – zero to 100 – that’s not GST. That is simply existing VAT rates in a new shape, old wine in a new bottle.” He said he hoped better counsel would prevail which would reduce the number of rates to “three or so”.
About states disagreeing and joining the second wave of GST reform, Chidambaram said that even when UPA had implemented VAT, some had not joined initially and they had joined later, and so eventually all states will fall in line. “Whatever, be the standard rates it will raise service tax,” he said.
But most of the states are in favour of Multiple Rate GST Formula
The new Goods and Services Tax (GST) will subsume a number of indirect taxes at the state as well as central level and is targeted for rollout from April 1, 2017.
At the GST Council meeting last week, there was a virtual consensus among states on imposing of the cess, which tax experts and industry have opposed vehemently, saying it defeats the very concept of one nation, one tax.
Besides, a four-slab tax structure of 6, 12, 18 and 26 percent with the lower tariff for essential items and the highest bracket for luxury and sin goods also found favour with them but a decision was put off to the next meeting on November 3-4.