To ensure smooth implementation of the Goods and Services Tax (GST), the government had appointed a nine members Committee with the following terms of reference:

(a)   The Committee may recommend possible tax rates under GST that would be consistent with the present level of revenue collection of Centre and States.

(b)   While recommending GST rates the Committee may develop a dynamic model to assess the impact of the following parameters on the tax rates viz. expected levels of growth of economy, different levels of compliance and broadening of tax base under GST.

(c)   Analyse the sector-wise and State-wise impact of GST on the economy.

(d)   The Committee may invite experts and stakeholders for consultations as it deems fit

What is RNR?

As per the report the term RNR will refer to that single rate, which preserves revenue at desired (current) levels. In practice, there will be a structure of rates, but for the sake of analytical clarity and precision but also to facilitate comparisons across methodologies, it is more useful and appropriate to think of the RNR as a single rate. It is a given single rate that gets converted into a whole rate structure, depending on policy choices about exemptions, what commodities to charge at a lower rate (if at all), and what to charge at a very high rate. That single rate will be the focal point for the RNR. The RNR should be distinguished from the “standard” rate defined as that rate in a GST regime (which has more than one rate), which is applied to all goods and services whose taxation is not explicitly specified. Typically, the majority of the base will be taxed at the standard rate, although this is not true for the States under the current regime.

The report explains that the Committee applied three technical approaches in estimating the RNR namely,
(i)     Macro Approach,
(ii)    Indirect Tax Turnover (ITT) Approach and
(iii)   Direct tax turnover (DTT) Approach

As per the report estimated GST base and corresponding RNR of the three approaches to estimating RNR are as under:

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