Revenue Neutral Tax Rate Upsc

When the new tax was launched in july 2017 the rate was 14 4 and over the next two years it had come down to around 11 6.

Revenue neutral tax rate upsc. Low service tax net. Manufacturing states loses revenue on a bigger scale. For example valuation as per excise valuation rules of a product whose consumer price is rs. It is intended to make the property tax reappraisal and rate setting process more transparent but instead it often muddies the waters.

18 nov 2019 11 09 pm ist ajit ranade. It is intended to make the property tax reappraisal and rate setting process more transparent but instead it often muddies the waters. The rate is required to be calculated and published by local governments but need not actually be adopted for the coming fiscal year. That is why a balance needs to be struck between the absolutely uniform tax rate and an adjustable tax rate by having a via media option of a combination of a floor rate and a band of adjustable rates which will act as the revenue neutral rate for the purpose of gst which is also the recommendation of the empowered committee while introducing the 122 nd amendment.

Taxable event at manufacturing point itself forms a narrow base. This has been a contentious issue. The rate is required to be calculated and published by local governments but need not actually be adopted for the coming fiscal year. What should be the revenue neutral rate.

Limiting the tax to the point of manufacturing is a severe impediment to an efficient and neutral application of tax. The arvind subramanian committee pegged the revenue neutral gst rate at 15 counter arguments. Although it has been progressively expanded to include a greater number of services each year and service tax revenue has grown the fastest of all revenue sources. Yet service taxes constitute merely 5 per cent of total general government revenues although they comprise about 60 per cent of gdp.

The revenue neutral tax rate is a bundle of contradictions. Goods and services tax gst is proposed to be implemented ad a new consolidated indirect tax regime from july 1 2017. 100 is say rs. In context of goods and services tax in india the revenue neutral rate is a rate of gst at which the amount of taxes currently collected by the government and the amount expected to be collected after gst remains the same.

High rate to tax to compensate the revenue collected now from multiple taxes i e high revenue neutral rate. The government had set up several committees to arrive at such rate. This increased tax rate has been called the revenue neutral rate rnr. The initial panels including 13fc recommended that rnr should be slightly above 12.

The revenue neutral tax rate is a bundle of contradictions. However states called this rate too low. A standard gst rate set at 12 may not be revenue neutral but could.