Sources privy to the development have told the Financial Express that the rates will be revealed just a few days prior to the July 1, 2017 roll-out of the goods and services tax.
The government is unlikely to announce the tax rates for various commodities under GST any time soon as it fears an early announcement could give rise to market distortions and hoarding.
Sources privy to the development told the Financial Express the rates will be revealed just a few days prior to the July 1 roll-out of the goods and services tax.
Rajat Mohan, Director-Indirect Taxation, Nangia & Co told FT that unlike western counterparts, India has a price-sensitive market where any indication of minor change in tax rates tempts the consumers to rate buy a product.
"This rate buying is not a good indication for any economy as it may result in black marketing and hoarding," he said.
He said the government could control such malpractices if rates are revealed closer to the GST roll-out date.
While establishing the GST rate for a particular item the panel will place it in a slab nearest to its current rate and it is expected that the GST council will keep in mind the real tax incidence at present rather than the nominal rate, the source said."For instance, if the nominal tax rate on an item with maximum retail price of `150 and ex-factory price of `100 is 26.5 percent (12.5 percent excise and 14 percent VAT), the real tax incidence on the price to the consumer could be just over 22 percent, as the excise duty is virtually levied on the ex-factory price, with abatement for post-manufacturing value addition," the report said.The Great Diwali Discount!
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