Budget 2015: GST to reduce tax burden, says Indira Rajaraman, RBI board member

CHANDIGARH: The implementation of Goods and Services Tax ( GST) will result in lesser tax burden on consumers, besides boosting country's economic growth, an RBI board member said today.

"The global average of GST rate is 16.4 per cent but in India, indirect taxes are as high as 28.2 to 30.8 per cent. The GST will help in decreasing the tax burden on the consumers," RBI Board Member Indira Rajaraman said at a conference here.

Rajaraman, a Member of the 13th Finance Commission, advocated the GST and described it as important tax reform that would place the country on a higher growth trajectory.

She said GST will replace an array of state levies, excise and other indirect taxes which all have cascading effects.

Obliquely referring to some opposition to the GST, Rajaraman said that every structural reform draws a battle line between immediate winners and losers but eventually all must win.

She said that industrial producing states for locational or historical regions stand to lose 2 per cent CST on inter-state sales and some other states like Punjab, Haryana and Maharashtra would lose the purchase taxes levied on food grains, oil etc.

However, the compensation for revenue loss has been included in the Constitution Amendment Bill 2014, as a transitory arrangement.

Referring to various developments on GST, Rajaraman said the GST constitution amendment bill was introduced in the Lok Sabha in 2010, which lapsed and had to be replaced.

The Constitution Amendment Bill was introduced on December 19, 2014. "The amendment creates a GST Council, which will decide on the rate structure and other parameters of the levy so that Parliament does not have to be approached every time a change is needed," she added.