After having opted for multiple rates under the upcoming goods and services tax (GST) regime, India is now looking to keep variations in rates on the same types of products at a minimum to ensure that the tax structure does not get any more complicated. For example, all types of footwear or mobile phones could attract the same rate.

“Single rate for one product group will bring simplicity in the structure and make implementation easier,” said a government official, adding that differing rate structures within one segment could lead to unnecessary disputes and litigation. GST is expected to be rolled out on July 1.

Globally, most regimes have a single rate. India has adopted a four-tier tax structure of 5%, 12%, 18% and 28%. The rate applicable on most products will be 18%. The highest rate has been pegged in the GST law at 40%. Many experts have said this structure will undermine the basic tenet of GST — a simple structure with at most two rates.

While the final call rests with the GST Council, the apex decision-making body for the proposed tax regime, key stakeholders are veering round to the view that multiple rates within single product groups need to be avoided. There have been demands from sectors such as biscuits for value-based differential treatment by exempting those priced below Rs 100 a kg and tax those above it. Experts said uniformity in structure will help keep litigation at bay. Uniformity in rates of various products in a commodity group will keep the structure neat and free from classification disputes, Tax based on value or MRP (maximum retail price) of the product would unnecessarily complicate the system and the value itself would need to be revised year after year, leader, indirect taxes, PwC. Having a uniform rate for a particular HSN classification is definitely a good idea… It will be simple, uniform and less litigation prone.