Finance ministry downplays cascading effect of levy

The finance ministry on Tuesday downplayed the cascading effect of one per cent tax over GST, proposed in the Constitution Amendment Bill.

A key official said the tax need not be one per cent, and could be much lower. The Bill says an additional tax on supply of goods, not exceeding one per cent, in the course of interstate trade or commerce, will be imposed. So, it might be, say 0.1 per cent, whose cascading effect would not be as high as feared, the official explained.

He said there is no problem in compensating states entirely for their losses due to the switch-over to the GST regime for five years. The RS select panel report could be tabled in the Upper House on Wednesday, according to the business schedule.

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