It is anticipated that the government might reduce the tax rates of items or products falling in the highest slab category i.e., 28 percent. Several state finance ministers have raised issues that numerous common used items levying 28 percent GST, due to which common people are facing problems with the implementation of the new taxation system.
According to Times of India (TOI), two state finance ministers said that several items including cement and bath fittings, Steel products like rods that are used for the construction purpose are placed in the highest slab rate of GST. State Finance Minister said, “The idea was to classify the goods and services into merit and non-merit goods with the non-merit goods in the top bracket. But we have gone beyond that.”
The state finance minister said that the “block” was too large and it is essential to reduce the items. CBEC officials said that several items were placed in the highest slab.
According to the second state FM, it is expected that the issues will be discussed in the next GST Council Meeting in Guwahati, the committee will focus on the issues faced by several states.
The Finance Minister Arun Jaitley said, “In the medium-term, the aim is to move to fewer slabs.” In the previous week, the minister said that the GST Council can revise the items placed in the top bracket in the upcoming future.
State government officials believe that 28 percent GST can lead to seller’s evading taxes, and then the shopkeepers ask customers to buy products in cash only, where there is no need for invoice generation.
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According to the sources, the GST Council Members will discuss in details in the next Council Meeting including revision of products falling in the top bracket, revenue impact and the tax credits available.
The government also announced that the panel of state Finance Ministers in Meeting will also discuss the different tax rates of restaurants and there is a need of reduction or rationalization. Currently, restaurants are imposing 12 percent to 28 percent, it depends on either they are eateries or restaurants in five–star hotels.
The GST composition scheme decided by the officials – for traders 1%, manufacturers 2 %, and eateries 5% with an annual turnover of up to Rs 20 lakh to Rs 1 crore allow all of them to pay taxes at a flat rate along with lower taxes.
The government had chosen a principle of equivalence at the time of deciding GST rates, which includes the combined incidence of the VAT, excise, and services tax.
The Central Government was trying that no rise in the burden of frequently used items under GST, specifically those items which come under consumer price index. Some items such as stationary were placed in the highest slab rate i.e., 28 percent.
