GST Rate at 18 percent Backed by the RBI

Reserve Bank of India, a high commission emblem in Banking fraternity is very much sure that the GST pre-decided rate will be coming to a good position while sticking to 18 percent which will be no harm to the CPI inflation charts too.

The RBI has indicated that the GST will bring along a trajectory kind of situation with itself in which inflation will be the key rolling point, but it will be all a short lived nightmare. RBI in its report has stated,”While the creation of a unified goods and services market in the country would reduce supply chain rigidities, cut down on transportation costs and also bring down costs in general through improvements in productivity, it could also produce a short-lived pass-through to the inflation trajectory.”

One time effects of GST will end after one year of GST implementation which was seen in the overseas experience of RBI. The GST council has been scratching heads for the rates to be implemented and on the other hand, RBI has stated that dual rate structure with a standard rate of 18 percent and low rate of 21 percent is a decent amount of rate which can deal with the inflation smoothly.

RBI cleared that, “The general consensus is that the impact on consumer price inflation is likely to be moderate if the standard GST rate is at 18 percent – in fact, overall price levels may go down due to more efficient allocation of factors of production,”

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RBI said, “As the standard rate increases from 22 per cent to 26 per cent and 30 per cent, the impact on CPI would increase from 0.6- 1.3 per cent and to 1.0-1.9 per cent respectively.”