With monthly Goods and Services Tax (GST) collections now consistently above ₹2 lakh crore, tax experts believe the timing is right for a major rationalisation of India’s indirect tax structure, including the possible removal of the 12% slab.
Speaking to CNBC-TV18, an tax expert, said the revenue share going to states from GST collections has improved significantly.
“When we say GST collections are at ₹2 lakh crore, a large part of that goes to the states. So, to some extent, concerns around revenue are addressed,” he said, suggesting that states may be more willing to support the Centre’s reform proposal than in the past.
A key part of the proposal being considered for the upcoming GST Council meeting involves reducing the number of GST slabs from four to three by merging the 12% rate with the 5% and 18% rates in a revenue-neutral way. He argued that this move would simplify compliance, especially for small businesses.
Another tax expert said the 12% slab currently includes a wide range of items such as packaged food, furniture, household goods, diagnostic kits, and construction material. He sees scope for significant downward movement in food products and even suggested the possibility of lowering GST on term and health insurance from 18% to 5%.
Another tax expert echoed the need for simplification, particularly for MSMEs in sectors like textiles and footwear that face complicated classifications. He said simplification would ease compliance and benefit both states and industry.
The next GST Council meeting is expected before the monsoon session begins on 21 July, and the Centre is hoping the current momentum and broad-based benefits of simplification will help build consensus among states.
Source from: https://www.cnbctv18.com/economy/gst-council-rate-simplification-rationalisation-revenue-cess-19616368.htm/amp
