After the increase in the prices of petrol, diesel and cooking oil, now the common man is going to have another hit of inflation. The government may increase the tax rate on the lowest slab of GST. This will directly affect the common man. In fact, in the next meeting of the GST Council, the lowest tax slab can be increased from 5 percent to 8 percent. With this, the list of exemptions in the GST regime can be reduced. A committee of state finance ministers is likely to submit its report to the GST Council by the end of this month. In this, different steps have been suggested to increase the revenue i.e. revenue of the government.
1.50 lakh crore Rs. will increase revenue
Sources say that by increasing the lowest rate of GST from 5 per cent to 8 per cent, the government can get additional annual revenue of Rs 1.50 lakh crore. An increase of one per cent can generate revenue of Rs 50,000 crore annually. This slab mainly includes packaged foods.
Also consider the three-tier structure
Sources say that the committee of finance ministers may also consider a three-tier GST structure in the next meeting. Its rates are 8, 18 and 28 percent. If the proposal is passed, all goods and services are currently taxed at 12 per cent, which will then come in the 18 per cent slab.
Highest tax on luxury products
At present, there are four slabs of GST – 5 per cent, 12 per cent, 18 per cent and 28 per cent. Luxury products attract the highest tax. Luxury and sin goods attract the highest cess above the 28 per cent slab. This cess collection is used to compensate the revenue loss to the states after the introduction of GST.
Discounts may end on these products
In the next meeting of the GST Council, it may also be proposed to reduce the number of items which are exempted from GST. Presently, unpacked, unbranded food and dairy items are exempted from GST.