States may get power to play with ‘State GST’ rates

GST in IndiaThe Cen­tre may allow States to uni­lat­er­al­ly play with State-lev­el Goods and Ser­vices Tax (State GST) rates as part of its efforts to build a con­sen­sus on the pro­posed dual-GST sys­tem in the coun­try. In the GST archi­tec­ture pro­posed dur­ing the UPA regime, the Cen­tre was to decide on the rates in con­sul­ta­tion with States.

The main issue was that all the States had to fol­low the rate­sand there was no room to uni­lat­er­al­ly devi­ate from them. They had to go to the GST Coun­cil to change the rates.

India is look­ing to imple­ment a dual-GST sys­tem, where the Cen­tre will impose a Cen­tral GST (CGST) and the States will impose a State GST (SGST). Over 150 coun­tries have imple­ment­ed GST. The pro­posed flex­i­bil­i­ty for States to tin­ker with SGST rates could enable con­sen­sus on the GST imple­men­ta­tion front.

Giv­ing the States flex­i­bil­i­ty to set rates will pro­vide a “psy­cho­log­i­cal boost” and may encour­age them to move for­ward on dual GST implementation.

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