GST requires a change in its rate structure, the government is urged to take the harder political decision soon or in the times to come. This is seen after the effective GST collections improvement from the previous fiscal year. The requirement to change the GST structure emerges from the concern that the revenue-neutral rates which were calculated through the 15th Finance Commission were assumed to be 15.6% which the original average rate was 11.8%. GST is held with the power to generate revenue at 7.1% of Gross Domestic Product (GDP) however it only generates nearly 5% of GDP. This essentially pointed towards the state and the central government who loses nearly Rs 4 lakh cr of revenue on the current level of GDP.
Read Also: GST Impact on Gross Domestic Product (GDP) in India
The revenue is required to get constant and towards it, the central government along with the GST official are having confusion and issues for the same subject to consider the meeting once again. A Group of ministers beneath the leadership of GST officials is thinking about the bigger amendment of the rate. Supporting the GoM is the fitment committee of GST officials. Excluding the surge in the GST rates on various goods and services, the Group of ministers will indeed think on the amendment in the present GST slab rate i.e 5%, 12%, 18%, and 28%. The fitment committee has urged in surging the slabs rates through 200 basis points for instance 5% slab must be raised to 7% and the 18% slab to 20%.
The other reports show that the National Institute of Public Finance and Policy (NIPFP) has suggested a three-slab structure of 8%, 15%, and 30% rather than the current four. Indeed NIPFP mentioned that the alliance of 12% and 18% slabs to any slab more economical with respect to 18% pointed towards loss of revenue. As per the prevailing discussions, it is seen that the indirect tax on goods and services will get a rise a, now the question is not if but it is when it will take place, it depends on the politics to raise the GST rates indeed it is more in hands of the ruling government. It is to be seen how soon the government is ready to bite the bullet.
