The three GST rates include 5, 12, and 18 percent would be directed to get integrated by the Union government, revenue secretary Tarun Bajaj specified. The union seeks to assess the possibility of a single GST rate.
Addressing the Assocham meeting specified that the rate of rationalization practice of the GST official would direct the result of the GST study, 5 years post its start, and there is no fixation among policymakers to raise the tax rates to the revenue-neutral level of 15.5%.
The government has intended to carry on with the top GST slab of 28% towards the luxury and sin goods.
From 5, 12, 18, and 28 percent, there is a need to carry on with 28% as in the development of the economy, towards economic development, the distinct income economy there will be much more luxury and things with sin which shall draw much higher tax rate.
“But, whether on 5, 12 and 18 (percent), we can bring down to 2 rates to start with and then see how the country grows and whether there is a capacity to bring it to one rate or not is something to be seen. It is a very difficult challenge,” Bajaj said.
“We keep talking of RNR (revenue-neutral rate) of 15.5 percent and the present rate being 11.6 percent, may be gone up to 11.8 or 11.9 percent with inverted duties being removed.”
The secretary specified that it is the duration post to the 5 years for introspection and see the road map of GST rate if there is a need to reduce the rates, what they currently are and what would be the commodities which could move towards higher rates and which could come at lesser rates.
“I think, we as policymakers and states now are looking at GST return from this eye and not having this objective that I have to somehow increase rates in some commodities to reach that 15 percent odd rate,” Bajaj added.
The subsequent GST council meet would be conducted in Madurai in August.
Beneath the GST is a four-rate structure that provides privileges or levies a 5% tax rate on mandatory items and a top GST rate of 28% on cars. The additional tax slabs are 12 and 18 percent.
The objective
- Cut 5%, 12%, 18% slabs to two or even one
- Highest 28% slab to stay
- No move to bring rates on par with 15.5% revenue-neutral rate
