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GST rates: Congress adopts wait and watch policy over 28% slab on 19% items

Amit Agnihotri/New Delhi 20 May 17 | 01:17 AM

Abhishek Manu Singhvi

The Congress adopted a wait-and-watch policy on the tax rates approved by the Goods and Services Tax (GST) Council, saying it was still work in progress, but expressed concerned over the applicability of the 28 per cent slab.

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“At the moment, it is work in progress. Full clarity does not exist regarding individual items. We will respond comprehensively only after specificity emerges in the proposals. But we are concerned over 28 per cent rate though it applies to only 19 per cent of items," Congress spokesperson Abhishek Manu Singhvi told Business Standard.

Congress Vice-President Rahul Gandhi has been a strong votary of the 18 per cent cap suggested by the party earlier.

Later, the party protested the four-tier tax rates of 5, 12, 18 and 28 per cent that was approved by the GST Council, saying tax over 18 per cent would hit consumer interests and a four-tier slab defied the very concept of a simple GST, as envisioned by the previous United Progressive Alliance government.

Party strategists said individual states might claim revenue loss once it becomes clearer which item falls under which tax slab.

The issue, therefore, has to be watched carefully.

Last month, when four supporting Bills to the main GST Bill were passed in the Budget session of Parliament, the Congress had urged the government to keep indirect taxes under the new tax regime low and affordable so they don’t add to price rise.

The Opposition party had planned a few changes to these supporting Bills but did not press for the changes.

While supporting the Bills, the Congress had expressed hope that the new regime would lead to a gradual reduction in the number of tax slabs in a time-bound manner.

Rajya Sabha member Rajeev Gowda had pointed out that while tax rates in India were routinely 18 per cent, they were less than 17 per cent in developed countries and around 16.6 per cent on an average in emerging economies.

A higher tax rate would turn India into a high-tax economy and hurt investment and economic growth.

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