Greening of the GST

The environmental dimension of taxes must rank high in any rate rationalisation exercise

With revenues from the Goods and Services Tax, or GST, having stabilised after the ebbing of the pandemic, the time is now appropriate for rate rationalisation, which will deliver both revenue buoyancy and a simpler rate regime.

There has been considerable debate on what should be the ideal rate structure. The broad contours are clear. We should move towards a three-tier rate structure. The GST exemptions need to be broadly phased out, with only those exemptions being retained that were exempted by the states under the earlier value-added tax or VAT regime. This was the principle recommended by a committee on