The Goods and Service Tax was criticised from the very first day for its multiple tax slabs. A major point that was raised in favour of multiple tax slabs in the ‘One Nation, One Tax‘ regime was the great disparity in the purchasing capacity of the common Indian citizens. Recently though GST rate rationalization is on top priority for the Central Government. The prime agenda of the upcoming GST Council meeting will revolve around rate rationalization and demonetization-hit SME sectors. In line with this development, another news suggests that the GST Council might replace the 12 per cent and 18 per cent slabs with a 14-15 per cent. The same has been confirmed by Bihar Deputy Chief Minister Sushil Modi.
Recently, Mr Sushil Kumar Modi attended a seminar organized by the Institute of Chartered Accountants of India. While addressing the seminar participants, Mr Sushil Modi shared that the GST Council was contemplating on the possibility of slab relaxation in upcoming days. But this would be ideal only when GST accrues cross the Rs 1 trillion mark. This would take almost a year to happen and when done would bring down the number of GST rates to four.
Some Facts Regarding Rate Rationalization:
- Till now Only April GST Collections touched revenue of Rs 1 trillion. (not including arrears of previous months)
- GST collections for May, June, and July stood at Rs 940 billion, Rs 956.1 and Rs 964.83 billion respectively.
- India is one of the 4 countries that have adopted a multiple tax slab GST. Majority of the other GST countries have one or at most 2 GST tax rates.
What do the Experts say?
Experts believe that reducing the number of GST rate slabs is a welcome move. But the 1-trillion-per-month pre-condition will take a year or so before it can be consistently met. So still, there is a lot of suggestion to be waiting for an answer and heard.
