Scope of central and state GST slab can be upto 40%: Experts

MUMBAI: Even as the government and the industry get ready for goods and services tax ( GST), the first nationalised indirect tax, few experts are worried that there could increase taxation in some cases.

Even though change in the peak rate will not alter the four-slab rate structure of 5%, 12%, 18% and 28% agreed upon last year, but is only a provision being built into the model law to take care of contingencies in future. This means the central GST and state GST can be up to 20% each, leaving the scope for a maximum levy at 40%, according to Khaitan & Co, one of the prominent law firms.

The GST Council has proposed to raise the peak tax rate to 20 per cent, from the current 14 per cent, in the model goods and services tax Bill to preclude the requirement of approaching Parliament for any change in rates in future.

There is already a worry around how would several companies decide on the place of supply. And that tax demand by different states on the same transaction could lead to litigation. Many companies are already putting their strategy and information technology (IT) systems in place so as to be prepared for GST.

GST would mean that many companies would have to follow a one tax regime and align their operations in a more transparent and stricter way with their vendors and their customers.