It would be preferable to wait till April 1, 2017, for a better Goods and Services Tax (GST) regime so that the essential objective of the GST to harmonise all the taxes prevails, NITI Aayog member Bibek Debroy said on Tuesday.
"It is far better in my personal view to wait till April 1, 2017, to have a better GST than a GST which ties our hands such that we nullify the essential objective of the GST which is harmonisation of all the taxes, " Debroy said here at a special session organised by Bharat Chamber of Commerce.
The government had signalled last month that the GST would be implemented from April 1, 2017 even if the constitution amendment bill on GST, currently stuck in the Rajya Sabha where the government doen't have a majority, got cleared in the budget session.
Debroy also said that "once we have the ideal GST, we know what the revenue neutral GST rate will be".
"When we have the rate, no one should ideally be allowed to have exemptions or deviations from the rate. Trouble, of course, is we have never been able to get rid of exemptions. The more you allow exemptions, the more is to nullify the objective of GST, " he said.
"An ideal GST is one where all other taxes are subsumed into the GST. There will be no other taxes and all will be clubbed to GST, said Debroy.
The noted economist also pointed out that due to tax exemptions, a huge amount of revenue was lost. If exemptions did not exist, the government would have greater revenues to fund more developmental work, he added. A
Tax - GDP ratio in India is about 17 percent, if one includes both union and state governments' taxes, he added.