3% GST on gold too low: Eco Survey
The Goods and Services Tax (GST) rate of 3 per cent on gold was low and needs to be increased as it is consumed by the ‘very rich’, feels Chief Economic Advisor Arvind Subramanian, the author of the Economic Survey.
According to the Economic Survey Volume II 2016-17, tabled in Parliament on Friday, “The tax on gold and jewellery products - items that are disproportionately consumed by the very rich - at 3 per cent is still low.”
The document also stated that there was a need to tax education and healthcare. “Keeping health and education completely out is inconsistent with equity because these are services consumed disproportionately by the rich,” it said.
Health and education are outside the tax net altogether, exempted under the GST and not otherwise taxed by the Centre and states. Alcohol, petroleum, energy products, electricity and some land and real estate transactions are outside the GST base but are taxed by the Centre or states outside the GST.
“Bringing electricity into the GST framework would improve the competitiveness of Indian industry because taxes on power get embedded in manufacturers’ costs, and can be claimed back as input tax credit.” “Inclusion of land and real estate and alcohol in GST will improve transparency and reduce corruption,” the Economic Survey said. The Survey said that the GST Council will have to take up these issues in the coming months.
“The GST Council, a remarkable institutional innovation in the governance of cooperative federalism and one that has proven to be so already in its first ten months of existence, will need to take up these challenges in the months ahead to take India from a good GST to an even better one,” it said.
The document also noted that the multiplicity of GST rates was a response to meeting a variety of objectives, including the need to keep rates down for a number of essential items to protect the poorer sections from price rise.
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