Multiple-rate GST will be disastrous: Chidambaram

The proposed multiple-rate goods and services tax (GST) structure will be “disastrous” and nothing more than same old value added tax rates in a “new shape”, former finance minister P Chidambaram on Monday.

“We sincerely hope we do not misinterpret the design of standard, standard minus and plus rates of GST. We can have 20 rates. It will be disastrous and that cannot be GST, it will be fooling the country,” Chidambaram told an interactive session with IIM Calcutta students on economic reforms.

“A well-designed GST is expected to have standard rate, plus and minus standard rate. That latitude interpreted to me as multiple rate — zero to 100 — that’s not GST. That is simply existing VAT rates in a new shape, old wine in a new (pictured) said bottle,” he said.

He said he hoped better counsel would prevail, which would reduce the number of rates to “three or so”. The new GST will subsume a number of indirect taxes at the state as well as central level and is targeted for roll-out from April 1, 2017. About states disagreeing and joining the second wave of GST reform, Chidambaram said that even when United Progressive Alliance had implemented VAT, some had not joined initially and they had joined later, and so eventually all states will fall in line. “Whatever, be the standard rates it will raise service tax,” he said.