Bibek Debroy said that the combined tax collection of the Center and the states is just 15% of the GDP, while the demand for government spending on public infrastructure is very high.
Bibek Debroy said that the combined tax collection of the Center and the states is just 15% of the GDP, while the demand for government spending on public infrastructure is very high.
Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Vivek Debroy on Monday said that India should have a single rate GST and exempt taxation system.
He said the total tax collection of the Center and the states is just 15% of the GDP, while the demand for government spending on public infrastructure is very high.
“On GST, it is my request, therefore, there should be a single rate. I don’t think we will ever get it…,” Mr. Debroy said at an event here.
He said that if differential tax rates for products of ‘elite nature’ and products of mass consumption are removed, it will reduce litigation.
Mr. Debroy said, “As a politician, we need to recognize that the GST should really be the same regardless of the product. If progress is to be introduced, it is done by direct taxes, GST or indirect Not by taxes.”
Shri Debroy also clarified that his speech should not be taken as a recommendation of PMEAC.
He said that the GST Revenue Neutral Rate (RNR) was estimated at 17% by the Department of Economic Affairs before the implementation of GST, but at present the average GST rate is 11.5%.
‘Do we need a tax exemption?’
“We should be ready to pay tax or we should be ready to settle for less delivery of public goods and services,” he said, adding that the revenue left by the government on account of exemption is 5-5.5 of GDP. % Is.
“So, the important question is whether there should be relaxation at all,” he said.
He also said that while tax evasion is illegal, tax evasion is legitimate by using exemption provisions to reduce the tax burden.
“Do we need these tax exemptions? The more tax exemptions I have, the more complicated it gets… Why can’t we have a simple tax structure devoid of all exemptions? We have to agree on some point. We should move towards a complete relaxation-less system,” Mr. Debroy said.
He also suggested that the ‘artificial distinction’ between corporate taxes and personal income taxes (PIT) should be removed.
“Many unincorporated businesses pay taxes under personal income tax. This (removal of the gap) will also reduce administrative compliance,” he said.