Bring alcohol and real estate within GST ambit: Panel

The government panel on GST has strongly recommended to bring alcohol and real estate within the GST ambit in order to reduce black money generation. 

In the same vein, it has advocated to bring electricity and petroleum within the scope of the GST to make Indian manufacturing more competitive.

 And, it suggested higher taxes on precious metals like gold in order to wean away people from the yellow metal that increases Centre’s import bill out of proportion.

“Choices that the GST Council makes regarding exemptions/low taxation (for example, on gold and precious metals, and area-based exemptions) will be critical. The more the exemptions that are retained the higher will be the standard rate. There is no getting away from a simple and powerful reality: the broader the scope of exemptions, the less effective the GST,” it said.

 On alcohol and real estate, it said, “It would be advisable at an early stage in the future, and taking account of the experience of the GST, to consider bringing fully into the scope of the GST commodities that are proposed to be kept outside, either constitutionally or otherwise. Bringing alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation. 

“Bringing electricity and petroleum within the scope of the GST could make Indian manufacturing more competitive; and eliminating the exemptions on health and education would make tax policy more consistent with social policy objectives,” the panel said.

 According to some estimates, real estate is about a tenth of the Indian economy, the extent of black money floating around in the sector is huge — many times more than what is said to be stashed away abroad.

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