Revenue implications prevent complete rationalisation of 28% slab

GST council likely to focus on 5% and 12% rate slabs

by Arjit Singh Bhambra

With recent rationalisation of the 28 per cent slab rate, the GST council is now likely to focus on 5 and 12 per cent rate slabs to further streamline the GST structure, as per a report in Economic Times. The council is also likely to consider inclusion of real estate and petroleum products under GST. However, revenue implications prevented complete rationalisation of the highest slab rate. The council’s decision to lower tax rate for 178 items to 18 per cent from 28 per cent would reduce tax revenue collections by about Rs.200 billion annually [see here]. Senior government officials believe that there is a scope for further lowering of tax rates on items of common-use. However, any further rationalisation will happen only after GST settles down and as more clarity emerges on the revenue impact.

References
1. https://economictimes.indiatimes.com/news/economy/policy/next-step-in-gst-recast-lower-end-of-tax-slabs/articleshow/61620482.cms
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