EAC-PM Chairman Debroy suggests single-rate GST, exemption-less taxation

Bibek Debroy said the tax collection of the Centre and states combined is just 15% of GDP, while the demand for government spending on public infrastructure is much higher

Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Bibek Debroy on Monday said India should have a single rate GST and taxation regime devoid of exemptions.

He said the tax collection of the Centre and states combined is just 15% of GDP, while the demand for government spending on public infrastructure is much higher.

"On GST, it is my submission, therefore, there should be a single rate. I don't think we will ever get it…," Mr. Debroy said at an event here.

If the differential tax rates for products of 'elitist nature' and those of mass consumption are done away with, it would lessen litigation, he added.

"As a polity, we need to recognise that the GST really should be the same regardless of the product. If progressivity is to be introduced, it is best done by direct taxes, not GST, or indirect taxes," Mr. Debroy noted.

Mr. Debroy also clarified that his speech should not be construed as a recommendation of the PMEAC.

The estimate of the GST revenue neutral rate (RNR) made by the Department of Economic Affairs before the GST rollout was 17%, but the average GST rate at present is 11.5%, he added.