Old VAT in New Bottles – Multiple-rate GST Bad for India

Three or Four Rates Enough, says Chidambaram

The proposed multiple rate GST structure will be “disastrous” and nothing more than same old VAT in new bottles, former finance minister P Chidambaram said on Monday, 25 Oct 2016.

“We sincerely hope that we do not misinterpret the design of standard, standard minus and plus rates of GST. We can have 20 rates.

“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.

At the GST Council meeting last week, there was virtual consensus among states on imposing a cess on specific commodities to compensate the States for loss of revenue, 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 per cent with 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.