GST: There is bad news for a common man on the inflation front. Actually, the government can increase the tax rate on the lowest slab of GST. According to a report by PTI news agency quoting sources, the GST Council may increase the lowest tax slab from 5% to 8% in its next meeting.
Report to be submitted this month
A panel of state finance ministers is likely to submit its report to the GST Council by the end of this month. It has suggested various steps to increase revenue including raising the lowest slab and rationalizing the slab. Explain that at present, GST is a four-tier structure, which is taxed at the rate of 5%, 12%, 18% and 28% respectively. Essential goods are either exempted or taxed in the lowest slab, while luxury and demerit items are subject to the higher tax slab. Luxury and sin goods attract the highest cess above the 28 per cent slab. Tax collection on this is used to compensate the revenue loss to the states after the rollout of GST.
Revenue will increase by ₹ 1.50 lakh crore
The agency said increasing the tax slab from 5% to 8% could generate an additional ₹1.50 lakh crore annual revenue. According to calculations, a one per cent increase can generate revenue of Rs 50,000 crore annually. This mainly includes packaged foods. Further, the GoM wants to make GST a three-tier structure, with revision of rates of 8%, 18% and 28% respectively.
Discounts can end with these items
If the proposal comes through, all goods and services that are currently taxed at 12% will move to the 18% slab. Apart from this, the minister can also add other items under different tax slabs. Apart from this, the GoM will also propose to reduce the number of items exempted from GST. At present, unbranded and unpackaged food items and dairy items are out of the purview of GST. Sources said that the meeting of the GST Council is likely to be held by the end of this month or early next month. In this, the report of the Group of Ministers will be discussed.