According To CEA, GST Slab Rationalisation On Cards
- ByAyushi Ray | July 30, 2021
According to the Chief Economic Advisor, GST slab rationalisation on cards. The rationalization of the goods and services tax (GST) structure into three slabs by merging two existing slabs is on the cards, and progress will therefore be seen. “It’s something that is definitely going to happen. The three-rate structure is definitely important. Even the inverted duty structure that is there is equally important to actually fix. The government is definitely seized of the matter. You should hopefully see traction on that soon,” he said at an event organised by Assocham. The original plan was to have a three-rate structure of GST, Subramanian said. “However, what we have to be very cognizant about is that often with policymaking, you don’t want perfection to become the enemy of excellence. GST, the way it got created with five rates, was basically an excellent move because now we are seeing the amounts that are coming in. The policymakers must be given credit for being practical enough to say, ‘let’s get it going first’,” he said.
India has four primary GST rates of 5%, 12%, 18%, and 28%. There is also a cess on luxury and demerit goods such as automobiles, tobacco, and aerated drinks. On precious stones and metals, special rates of 0.25% and 3%, respectively, are applicable. A proposal to merge the 12% and 18% slabs into a single rate has been discussed for several years. However, no final proposal on this has been made at the GST Council, which will take a call on it. If the council approves the merger of the two rates, items such as ghee, butter, cheese, and spectacles may become expensive, while soap, kitchenware and apparel may get cheaper. In its report tabled in Parliament earlier this year, the 15th Finance Commission (FFC) urged restoring the “rate neutrality of GST”, which was compromised by rate cuts.
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