The Committee recommends a two-rate structure.

The Committee would recommend

that lower rates be kept around 12 %(Centre plus states) with standard rates varying
between 17 and 18%.
For easy implementation and better compliance at an early stage we should focus on
low rates and not adding to inflationary pressures will be critical.1

“Should I tax items that are perceived to be elitist at higher rates, or should I tax items
of mass consumption at lower rates? I personally think, as an economist, we should
not do that,” he explained.

According to the economist, the rates can be taken care of only through direct taxes
and not through indirect taxes. “And one of the problems, which we have with the
present GST, is the multiple rates2

The multiplicity of rates India has opted for the GST, would also be a
challenge for officials as well as businesses.

“There is the tax on the output and the tax credit on input, but there
are so many different tax rates so how to apply different rates to
different commodities and services for output 3
But empirical cross-country evidence (on VAT) indicates such gains happen when all
items are included and there are no more than two or three rates. In working out
compromise solutions, the GST Council has deviated quite a bit from that goal.4

Earlier, Chief Economic Adviser Arvind Subramanian, addressing the ICFAI

Institute of Higher Learning in Hyderabad, hinted at a reduction in the
number of tax slabs under the GST, with the merger of 12 percent and 18
percent tax slabs into one. 5

1
https://www.speakingtree.in/blog/can-gst-can-still-be-saved-with-the-advice-of-dr-arvind-subramanian-on-
possible-tax-rates-under-gst
2
https://scroll.in/latest/842290/niti-aayog-member-bibek-debroy-says-gsts-multiple-rates-could-be-a-problem
3
http://www.thehindu.com/business/Economy/gst-transition-to-pose-hurdles-adb/article19180466.ece
4
http://indianexpress.com/article/opinion/columns/gst-importance-of-being-simple-4737645/
5
http://www.newindianexpress.com/business/2017/nov/25/finance-secretary-hasmukh-adhia-others-want-
reduced-gst-slabs-more-simplification-1710967.html