India panel gathers to set rate for new sales tax

VRL Logistics

18/10/2016 07:39

NEW DELHI, Oct 18 (Reuters) - Finance ministry and state 
finance ministry officials gathered in New Delhi on Tuesday for 
a three-day meeting that will seek to finalise the main rate of 
the Goods and Services Tax and pave the way for its introduction 
next April. 
    The long-delayed tax, which would transform Asia's 
third-largest economy into a single market for the first time, 
should boost revenues through better compliance while making 
life simpler for businesses that now pay a host of federal and 
state levies.  
    Prime Minister Narendra Modi, who wants to make doing 
business easier in India, has said India needed the tax reform 
to end widespread evasion by businesses and prevent officials 
from waging arbitrary tax "terrorism". 
    Last month the GST Council, a decision making body that 
comprises federal and state finance ministers, resolved key 
issues on how the sales tax would work and approved draft rules 
for its collection.  urn:newsml:reuters.com:*:nL3N1BZ3GJ 
    Finance Minister Arun Jaitley expects to get parliamentary 
approval for bills next month that would set the rate and scope 
of the GST. The states would also have to approve similar bills 
in their assemblies. 
    The GST would do away with levies charged when goods cross 
state lines, a boon for manufacturers and shippers, and shares 
in logistics companies including Gati Ltd  GATI.NS , VRL 
Logistics  VRLL.NS  and Allcargo Logistics Ltd  ACLL.NS  gained 
by between 3 and 4.6 percent before the meeting.  ID:nL4N1CO1S6  
    The finance ministry has proposed four tax slabs, with the 
highest at 26 percent for about 20-25 percent of taxable items. 
Other slabs included 12 percent for food and fast-moving 
consumer goods (FMCG), and 6 percent for precious metals like 
gold and for essential items. 
    If the states agree to its proposal, the standard rate could 
be set around 18 percent, said a government source with the 
direct knowledge of talks. Withdrawing various exemptions in the 
next budget could help reduce the GST rate later.          
    A panel headed by Arvind Subramanian, chief economic adviser 
to the finance ministry, had proposed a "sin tax" rate of 40 
percent for GST on limited items such as aerated drinks, luxury 
cars and tobacco products. 
 
 (Reporting by Manoj Kumar; Editing by Douglas Busvine and Simon 
Cameron-Moore) 
 ((manoj.kumar@thomsonreuters.com; +91 11 4954 8029; Reuters 
Messaging: manoj.kumar.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA TAX/