(MENAFN- KNN India) New Delhi, Apr 9 (KNN) A renowned Indian economist and former finance commission chairman has proposed introducing a single 12 per cent goods and services tax (GST) rate across the country to simplify the current multi-rate system.
In his remarks after receiving the 4th TIOL Fiscal Heritage Award 2023 in New Delhi, Vijay Kelkar stated that the next central government should prioritise amending the GST laws to establish a uniform 12 per cent tax rate nationwide.
Kelkar, who served as the chairman of the 13th Finance Commission, highlighted that most developed and emerging economies have adopted a single GST or VAT rate.
He argued that countries with simpler tax regimes have optimised revenue collection while minimising disputes.
Under the current GST system in India, there are five different tax rates in addition to compensation cess on certain goods, making it unnecessarily complex according to Kelkar.
"The ages old tax policy of having a differential tax rate for 'must have' and 'nice to have' goods and services should be done away with," he said.
The 13th Finance Commission, during Kelkar's tenure from 2010-2015, had recommended a single 12 per cent GST rate for the country.
Equitable GST Sharing with States and Local Bodies Kelkar also proposed a constitutional amendment to ensure equitable distribution of GST proceeds among the central government, state governments, and local urban bodies like municipal corporations.
He emphasised the need to strengthen the fiscal base of urban local governments to support India's rapid urbanisation and economic growth through efficient infrastructure development.
An independent GST Council Secretariat was another suggestion from the former bureaucrat to ensure neutrality in the advisory role to the governing GST Council.
India's GST revenues hit Rs 1.78 lakh crore in March 2023, the second-highest monthly collection, indicating robust tax compliance and economic activity.
(KNN Bureau)
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