Higher revenue neutral rate can lead to leakages: Mitra on GST

New Delhi: A higher revenue neutral rate under the proposed GST law will lead to leakages, compliance issues, West Bengal Finance Minister Amit Mitra said Wednesday.

"What is interesting to us is we have to watch it carefully. If the revenue neutral rate is too high there will be leakages, there will be lower compliance ... GST's whole effort is to make it transparent and simple the tax," he said.

Mitra, who is also the Excise, Commerce and Industries Minister of West Bengal, was interacting with media on the occasion of West Bengal Day being celebrated at the trade fair here.

On asked about the status of Trinamool Congress party on the proposed Goods and Services Tax (GST), Mitra said: "TMC's position is that we in principle agree, in practice we have many issues for which we have written to the Finance Minister, one at a time."

"So like this, there are many issues, on any question on GST, in-principle we agree. And some of them have been met some of them will have to be met. For example revenue neutral rate, we don't know what the revenue neutral rate or tax will be after GST. For 26 or 27 percent rate of GST, there will be lot of leakages. So that's another in practice question, in principle we support," he added.

He said the West Bengal government is among the few participants in the country who has supported the proposed GST with clarity.

"I have been on the empowered committee of the Finance Ministers (on GST). Almost all states supported West Bengal's position, because we agree in-principle but in practice we have to be in the act of federalism. Mamata Banerjee has repeatedly said there has to be consistency in federalism," Mitra said.

He said TMC will continue to raise the issue of revenue neutrality so that there are no leakage issues.

On asked about Congress party's approach on GST, he said, "Now the revenue neutrality issue we have raised, we will continue to raise so that there is no leakage. I have nothing to do with what Congress is saying."

Mitra said no revenue neutral rate has yet been agreed to or given to the empowered committee of finance ministers, adding that the call has to be taken by the panel.

He also said the National Institute of Public Finance & Policy has given a revenue neutral rate and probably submitted to the government.

"The National Institute of Public Finance & Policy has given a revenue neutral rate. We at empowered committee ourselves to do study...The estimates have to be accurate. So now they (NIPFP) are finishing the study and probably has been given to the government, it has not been shared with the empowered committee."