Vijay Kelkar advocated for eliminating the longstanding practice of differential tax rates for essential and non-essential goods and services.
Vijay Kelkar, former Chairman of the 13th Finance Commission, has called for the immediate introduction of a uniform Goods and Services Tax (GST) rate of 12% across India. In a recent statement, Kelkar emphasized the importance of streamlining the GST system for the benefit of the economy.
Highlighting the need for constitutional amendments, Vijay Kelkar suggested ensuring fair distribution of GST proceeds among the Central government, State governments, and local bodies such as municipal corporations. He noted that this equitable sharing would bolster the fiscal foundation of urban governance and promote grassroots democracy.
“The implementation of a single 12% GST rate nationwide would simplify our tax structure and reduce complexities,” Vijay Kelkar stated. He pointed out that many developed and emerging economies have successfully optimized tax revenues and minimized disputes by adopting a similar approach.
Kelkar also advocated for eliminating the longstanding practice of differential tax rates for essential and non-essential goods and services. He mentioned that the 13th Finance Commission had recommended the 12% single GST rate during its tenure from 2010 to 2015.
India witnessed a substantial increase in GST revenues, reaching ₹1.78 lakh crore in March 2023, marking the second-highest collection to date. Kelkar attributed this success to the potential of urban India, which is rapidly becoming a key contributor to economic growth and technological advancement.
“Our urban economy requires enhanced infrastructure and better access to local public goods,” Kelkar emphasized, noting the current inadequacies in funding for urban local bodies.
To further improve the functioning of the GST Council, Kelkar proposed the establishment of an independent Secretariat. He expressed concerns that the current administrative arrangement might not always be perceived as neutral by State governments, who are equal members of the Council.
Kelkar’s remarks came during the 4th TIOL Fiscal Heritage Award 2023 ceremony, where he was honored alongside N K Singh, Chairman of the 15th Finance Commission. Renowned economist Jagdish Bhagwati was also recognized with the Kautilya Global Award 2023 during the event held in the capital.
In conclusion, Vijay Kelkar stressed the importance of swift action in implementing a simplified GST system to drive economic growth and ensure effective governance at all levels.
To Read about GST provisions on Export of goods from India CLICK HERE
ALSO READ
Bar Council of Kerala Taken its Case against GST Notices to Kerala High Court
Bombay High Court Strikes Down Penalty of Rs 3731 Crore on Employees