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GST select panel begins groundwork; rate targeted below 22%

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For the first time after its formation, the 30-member select panel for the goods and services tax (GST) met with officials from the finance ministry yesterday and is slated to meet state and industry officials soon, sources have told CNBC-TV18. The GST bill, that aims to bring in a single tax in place of a number of state and central level taxes and levies, was referred to the select panel after opposition from other parties. CNBC-TV18 learns that the government wants to put in place the high-powered GST council, comprising of the union and state finance ministers, before August end, in order to be able to meet the tax’s rollout target date of April 1 next year. The need for the quick formation of the GST council is exacerbated as the government would need it to be formed in order to be able to frame the central CST, state GST and integrated GST bills, which will go to the Parliament and various state legislatures for nod. Further, sources say that the government is keen to keep the revenue-neutral rate below 22 percent (the rate which will cause no loss to the combined state and central tax pool). For this, GST will have to bring in as many items in its baskets as possible. A study had earlier said that were the central to leave out high-tax items such as alcohol, tobacco and petroleum products out of the GST’s ambit, as has been demanded by many states, the revenue neutral rate could come out as high as 27 percent. The government would set up a compensation fund – to make up for states’ losses wherever they occur due to GST’s rollout – after a decision on the RNR is taken.


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