The standard Goods and Services Tax (GST) rate should stay below 20 per cent and services of mass consumption should be included in the ‘Merit’ list to ensure that prices of critical services like telecom, banking, healthcare, railways do not lead to inflation, an Assocham internal assessment on the GST roadmap has noted.
“The industry can live with GST benchmark rate of a band of 17-20 per cent. Anything above that will be counterproductive and lead to inflation, especially on the side of services”, said Assocham on Saturday.
According to Assocham constituents, the focus should be to get the maximum tax buoyancy through more and more trade and industry channels in the small scale and unorganized sectors joining the mainstream value chain, rather than keeping the standard GST rate high.
“With the kind of IT backbone being readied, the taxation stream should be able to detect any link breaking the value chain. Industry would also like to fall in place if seamless input credit is available and adjusted with the net result that the overall tax incidence, especially on goods is brought down,” said Assocham.
Though states have concerns over the possible revenue loss, Assocham said tax buoyancy, GDP growth and operational efficiency would make it a win-win situation even for the States.