The Centre is set to propose that the rate of tax on gold consumption be doubled under the Goods & Services Tax (GST) regime so as to allow the GST council the elbow room to set a lower standard GST rate. Necessary cushionThe government’s main argument in the GST Council, which will start meeting from Thursday, will be that the increase in revenue from gold consumption will provide the necessary cushion for the standard GST rate to be fixed at a level lower than 20 per cent. This, the panel had argued, would protect the revenues of the States even if the standard rate of GST was pegged below 20 per cent. In consultations earlier, some States had expressed concerns that a high rate of GST on gold was not “politically feasible”. However, a system in which the rate on gold was kept low and the standard GST rate was high, would result in poor people ending up subsidising the gold consumption of the rich, a Finance Ministry official said.

Source: The Hindu September 15, 2016 18:30 UTC