The Central Board of Indirect Taxes and Customs (CBIC) indicated on Thursday that Goods and Services Tax (GST) collections could see a temporary dip in the initial months following the implementation of the overhauled 2.0 tax structure, reported PTI.
“Expect some dip in GST collection for initial months, as taxes are paid through accumulated ITC, but festive demand will boost sales,” said the CBIC chief Sanjay Kumar Agarwal.
However, to ensure a seamless transition, the GST department is working closely with industry stakeholders to upgrade and align IT systems. “GST dept coordinating with industry to upgrade software for smooth, glitch-free rollout of overhauled tax structure,” the CBIC chief added.
In addition, Agarwal expressed confidence that the new rates and tax computation system, which come into effect from September 22, will be implemented without disruption. He noted that businesses and industry players have a two-week window to make necessary adjustments to their back-end systems.
The changes come on the back of a major restructuring of the GST regime announced by Finance Minister Nirmala Sitharaman on Wednesday.
The new system collapses the earlier four slabs into two principal rates of 5% and 18%, alongside a new 40% slab for high-end and “sin” goods such as cigarettes, pan masala, gutkha, and aerated beverages. Additional levies above 40% have been abolished, reducing the effective tax burden on mid-size and big cars.
While the government estimates the tax cuts will result in a revenue loss of Rs 48,000 crore—far lower than some economists’ projections of Rs 1 lakh crore—it expects the move to support consumption and ease inflation. Citi has projected that retail inflation could drop by as much as 1.1 percentage points if the rate cuts are fully passed on to consumers.
The new tax rates, which take effect from September 22, will also bring tighter compliance for sectors like tobacco, where valuation is shifting from transaction value to retail sale price. Meanwhile, certain items such as apparel above Rs 2,500 and coal have seen tax hikes, even as most consumer goods benefit from reduced rates.
Source #ET
