Multiple rates key problem with present GST: Bibek Debroy

New Delhi, June 30 (IANS) NITI Aayog member and well-known economist Bibek Debroy on Friday said that one of the key problems with the GST (Goods and Services Tax) regime is its multiple rates structure.

According to Debroy, the multiple rates of GST emanate from the "desire to tax items" which were perceived to be luxury through the means of indirect tax.

"Please understand these multiple rates are coming from... this desire to drive other ends through indirect tax policy and other concerns of the states," Debroy said at the Aaj Tak GST Conclave.

"And, therefore, you have plenty of exemptions, plenty of items that are outside the GST net and multiple rates."

The present GST tax rates are divided into four slabs -- 5 per cent, 12 per cent, 18 per cent and 28 per cent -- as decided by the GST Council.

The GST regime touted as the single most significant tax reform since Independence will be implemented from July 1.

Besides rates, Debroy said the present GST set-up might not be perfect but it was a step in that direction.

The economist rejected the claim that the GST would increase gross domestic product (GDP) growth rate by 1.5 per cent.

"This is total rubbish. Such speculations are based on the assessment of the 13th Finance Commission, which gave that figure for an ideal GST. We are nowhere near an ideal GST," Debroy said.

In addition, Debroy refuted claims that there were around 150 countries in the world having GST.

"There are talks that 140 countries or 160 countries in the world that have GST. This is rubbish. There are many countries in the world have VAT (value added tax). A VAT is not GST. The number of countries having GST is six or seven, not more than that," Debroy said.

"Except one, all are unitary. The only country in the world which is federal and has GST is Canada. India is only the other federal country in the world to have GST."