New Delhi: The government intends to continue with the top GST slab of 28 per cent for luxury and sin items but is ready to discuss reducing the three slabs of 5, 12 and 18 per cent into two, Revenue Secretary Tarun Singh said. Bajaj said today. monday.
Addressing the industry leaders, Bajaj said that the exercise of rationalization of rates GST Council This is the result of introspection five years after the GST was implemented, and policymakers are not “sexy” at raising tax rates to a revenue-neutral level of 15.5 per cent.
On the industry’s demand to bring petroleum products under the purview of GST, he said since fuel forms a major part of their revenue, both the Center and the states have some apprehension. “We’ll have to wait some time.”
“Out of 5, 12, 18 and 28 per cent, we have to continue with 28 per cent because in a developing economy, in an economy with such high income inequality, there will be some luxuries and sin goods which should and should attract higher rates of taxation. Do it.
“But, whether at 5, 12 and 18 (percent), we can bring the 2 rates down to start with and then see how the country grows and whether there is the ability to bring it down to one rate, it’s something Must be seen. It is a very tough challenge,” Bajaj said at an ASSOCHAM event.
Under GST, a four-rate structure that exempts or levies a lower rate of 5 percent on essential goods and a top rate of 28 percent on cars. The other slabs of tax are 12 and 18 per cent.
In addition, there is a special rate of 3 per cent for gold, jewelry and precious stones and 1.5 per cent for cut and polished diamonds.
Also, cess is levied on the highest tax slab of 28 per cent on luxuries, sins and demerits. The collection from the cess goes to a separate fund – the Compensation Fund – which is used for revenue loss to the state due to the GST rollout.
The GST Council has constituted a Group of Ministers (GoM) under Karnataka Chief Minister Basavaraj Bommai to suggest rationalization of tax rates, merging of slabs, review of the exemption list and fix duty reversal in those cases. where the tax on the final output is the least. in that inputs. The GoM has been given 3 months to submit the final report.
According to an RBI study, the weighted average tax rate under the Goods and Services Tax (GST) has come down to 11.6 per cent from 14.4 per cent at the time of its launch.
According to the Subramanian Committee report submitted ahead of the GST launch, the revenue-neutral rate under GST should be around 15.5 per cent.
Last month, based on the GoM’s interim report, the GST Council had removed tax exemptions on several items including pre-packaged and labeled wheat flour, paneer, curd and lassi, while fixing the reverse duty on items such as LED lamps, solar did. Water heater.
“We keep talking about RNR at 15.5 per cent and the current rate is 11.6, removing the reverse charge and going up to 11.8 or 11.9 per cent. What is this? Are we seeing that we should reach the rate of 15 per cent. I Don’t really think that there is any fetish in the minds of policy makers that we have to reach that particular rate,” Bajaj said.
The Secretary said that it is time to introspect after five years and see how the GST rate structure has unfolded, whether the number of rates needs to be reduced as compared to the present and what are the items which can go for higher rates. and which can come at lower rates.
Bajaj said, “I think, we as policy makers and states are now looking at GST from this point of view and not with the objective that I have to increase the rates in some items to reach the odd rate of 15 per cent. have to increase.”