Slabs under goods and services tax (GST) can be reduced to three from five at present in coming days for the convenience of consumers and businesses, Sushil Kumar Modi, Bihar deputy chief minister and head of high-level minister panel on GST, said.
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39th GST Council Meeting: Full list of decisions taken - All you need to knowSlabs under goods and services tax (GST) can be reduced to three from five at present in coming days for the convenience of consumers and businesses, Sushil Kumar Modi, Bihar deputy chief minister and head of high-level minister panel on GST, said.
In an interview, Modi said that there are five slabs in GST and “there is an intention to reduce it to three slabs but it will take some time” as it is related to states’ revenue.
Reacting to questions raised by former finance minister P Chidambaram that why rates of 88 items were not reduced by GST Council in 2017, Modi said, “This is not a decision where only BJP government is involved. The decision has been taken by GST Council in which Congress-led governments are also involved”.
He said that after the implementation of GST, initially, it was to ensure that there should be no revenue loss and then, the rate on many items were gradually reduced with stabilisation of revenue.
Modi said that average revenue from GST is approximately Rs 95,000 crore and in such situation, rates are being reduced, which is leading to a reduction in the price of many consumer items and benefitting the middle class.
The GST Council has pruned the 28% slab by cutting tax rates on 191 goods over the last one year, leaving just 35 items, including AC, digital camera, video recorders, dishwashing machine and automobiles, in the highest tax bracket.
There were around 226 goods in the 28% category when GST was implemented on July 1, 2017.
Over the last one year, the Council, chaired by Union finance minister and comprising state ministers, has slashed rates in 191 items.
The 35 goods which will be left in highest slab once the new GST rates are implemented from July 27, also include cement, automobile parts, tyres, automobile equipment, motor vehicles. yachts, aircraft, aerated drinks, betting and demerit items like tobacco, cigarette and pan masala.
Experts said going forward as the revenues stabilise, the Council may look at further rationalisation of the 28% slab, to restrict the highest tax slab to super luxury and sin goods.
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Deloitte India Partner M S Mani said it would be logical to expect that once the GST collections after the recent reductions stabilise, the remaining items such as televisions of all sizes, dishwashers, digital cameras, air conditioners could be considered for an 18% rate.
“It would be ideal if only demerit goods are retained in the 28% slab so that a gradual movement towards having fewer GST slabs can be initiated,” Mani said.
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