The Madurai-based Tamilnadu Chamber of Commerce and Industry, most of whose members are traders, has called for fixing the Goods and Services Tax rate at 18 per cent.

The chamber says it is “apprehensive” that the ‘revenue neutral rate’ may be fixed at a much higher rate, in which case “it will be very difficult to reduce the rate at a later stage, even if the Central government decides to do so because any decision will require three-fourths majority of the GST Council,” the Chamber has said in a press release.

“Major consuming states (which will stand to gain by higher taxes) will oppose any such move,” the statement says. Further, a high rate of taxation will induce tax evasion and the interests of honest traders will be sidelined, it says.

It is critical that the maximum rate of tax under GST should be capped at 18 per cent in the 122nd Constitution Amendment Bill itself. “If it is not feasible to do so, the Central government may fix the maximum GST rate at 18 per cent for the first five years as it has recently inserted a provision in the Bill for providing 100 per cent compensation for loss of revenue that may be sustained by the States, for the first five years of GST implementation,” the Chamber says.

“We request all political parties to take into consideration the overall industrial and economic growth of the nation and extend their co-operation and facilitate introduction of GST in the country from April 1, 2016.