Commodities are taxed at a rate closer to the existing levy currently, and VAT or value added tax rate is 5 percent on the lower side. Isaac believes that it is now proposed to increase the VAT to 6 percent which is not a good idea.
Tax rate on consumer durables is above 30 percent, Isaac reiterated and said that there is no sense in reducing them to say 26 percent. “So the rate structure needs a lot of fine-tuning.”
As no business house has said they will pass on to the consumer the reduction in the tax burden, there is no case in reducing the tax, he said.
As regards dual control, the model suggested that it is too complicated.
K Pandiarajan, Minister, said that there has been a healthy exchange of ideas. “If it does go in the same manner of transparency and fiscal equality, GST could prove to be what it is destined to be,” he said.
Abhimanyu Sindhu, Cabinet Minister, Haryana, said that whatever levies that luxury items and tobacco products and demerit goods attract will include the cess. Whatever additional cess over and above the 26 percent tax will be form the cess component, said Sindhu.