The GST Council has proposed to raise the peak tax rate to 20 per cent, from the current 14 per cent, in the model goods and services tax Bill. If the proposed change would be made, the GST levy might go up to 40 per cent.
The model Goods and Services Tax Bill will replace the clause which states the tax rate "not exceeding 14 per cent, with "not exceeding 20 per cent" when it comes up for debate in Parliament during the second phase of Budget session beginning next week.
However, the change in the peak rate will not alter the four-slab rate structure of five, 12, 18 and 28 per cent agreed upon last year, but is only a provision being built into the model law to take care of contingencies in future.
The revised draft of model GST law, which was made public in November 2016, provides for a maximum rate of tax under the new regime at 14 per cent (14 per cent central GST and an equal state GST, taking the total to 28 per cent).
"There shall be levied a tax called the central/state goods and services tax (CGST/SGST) on all intra-state supplies of goods and/or services... at such rates as may be notified by the central/state government... but not exceeding 14 per cent on the recommendation of the Council and collected in such manner as may be prescribed," the draft law states.
Officials said this 14 per cent will now be changed to say the rate will not exceed 20 per cent. The GST Council, headed by finance minister Arun Jaitley and comprising representatives of all states, has agreed to keep the upper band of the rate in the law at 20 per cent.
The Centre plans to introduce in Parliament the Central GST (CGST) Bill in the forthcoming session beginning March 9. After it is ratified, the states will introduce the State GST (SGST) Bill in their respective legislative Assemblies.
On Tuesday, Economic Affairs Secretary Shaktikanta Das while speaking to reporters also said: "GST implementation is a huge one and that is going to be implemented by July 1. Both federal and state government are working on this one."
Last month, representatives of All India Association of Central Excise Gazetted Executive Officers and those from Indian Revenue Service (Customs and Central Excise)decided to send at least 50,000 letters to Prime Minister Narendra Modi seeking his intervention to ensure successful roll-out of Goods and Services Tax.
Confirming the news, Anup Kumar Srivastava, President of IRS officers association said, "We have decided that each employee working under Central Board of Excise and Customs (CBEC) will write a letter to the Prime Minister seeking his intervention for the successful GST".