As the Government is working on the 4-slab rate, somehow the Government would be synchronizing current exemptions schemes with upcoming GST regime as for some better reason and has declared that it would be that it is “pro-poor” with 50 percent of essential goods and services exempted from any tax. The Govt decided this ahead of the GST council meeting scheduled on September 22-23, 2016.
An official said that “The tax exclusion to nearly half the goods and services would be “optically and politically correct” for the NDA government as already 300 items in the Centre and nearly 80 items in the states have this exemption.”
On Wednesday, a revenue meeting was held which discussed the run-up to the rollout, and the result deduction was that the new tax regime should not put fresh inflationary pressure and supported Revenue Secretary Hasmukh Adhia’s proposal of a tax band of 8 to 26 percent with four rate slabs.
As from the information, the slab rates were modified and suggested that proposed slab rates of 8, 10, 18 and 26 per cent altered to 10, 12, 16 and 25 per cent so that it did not affect revenue earnings while keeping states on board as the final call has to be taken by the GST Council comprising state Finance Ministers and headed by Finance Minister Arun Jaitley.
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There was a need of revision over the rates of the taxes and revenue implications for the center and states and the prepared data will be showcased in the next review.
Arvind Subramanian panel had recommended a three-rate structure with essential goods at 13 per cent, demerit goods at 40 per cent and the remainder at a standard rate of 17-18 per cent. But the neutral rate of the revenue is estimated to be 15 – 15.5 per cent.
For now, the national sales tax scheme is about to prepared after which the timetable in the meantime to get support from legislation for the approval. All this information was showed by Finance Secretary Ashok Lavasa.
