GST structure: There is room for improvement in multi-tier tax framework, says Chidambaram

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The proposed GST structure with “higher rates” has left “a lot to be desired” and there is a room for improvement in the multi-tier tax framework, former Finance Minister P Chidambaram said here today.

The senior Congress leader further said the government should announce “GST slab that will be acceptable in Parliament”.

Fielding questions from students after a lecture on economic reforms at IIT Madras, he said, “It is too early for me to form an opinion. I want to see the fine-prints of the decision.”

Quoting media reports, he said the government has decided on slabs like nil rate, 5, 12, 18 and 28 percent and then a ‘sin tax’ of 60 percent plus cesses.

“I think there is a room for improvement, I think there is a lot to be desired in that higher rates. I agree that initially we will have more than one rate. In fact, I said in Parliament that you must have a standard, standard minus and standard plus,” he said, adding there will also be zero rate.

“…I can understand four rates, but I cannot understand six rates plus cesses…I think there is still a scope for improvement. But I have not come to a final view in the matter. I will take a final view after I study the matter more carefully,” Chidambaram said.

Speaking to reporters later, he said in general the government was going on the path “we (Congress) had indicated in our Parliament debates, but my opinion is some corrections need to be made in this regard”.

He said a five (slab) rate structure itself was high as the world over GST was one tax.

“Since GST is being introduced in India, I had said that there could be standard, standard minus and standard plus. If you include 0, that will make it (slab) four. Now four has become five and it looks it might go up to seven or eight. All these things should be reconsidered,” the former Finance Minister said.

He further said the government does not appear to have taken a final decision.

The next meeting is on November 24 and I feel they will reconsider these things in that meeting. The government should announce GST slab that will be acceptable in Parliament.

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