New GST reforms unlikely to put major burden on govt revenue: Crisil

Crisil said that govt has estimated the revenue loss at ₹48,000 crore, which is modest in comparison to last year's ₹10.6 trillion collections

The latest Goods and Services Tax (GST) reforms are unlikely to put any significant burden on the government revenue, ratings agency Crisil said, according to PTI.

 

In its latest assessment, the agency noted that the government anticipates a short-term annualised revenue loss of about ₹48,000 crore due to the rationalisation exercise. Given that GST collections stood at ₹10.6 trillion in the last financial year, the projected loss remains relatively modest, the agency said.

 

Earlier this month, the GST Council approved a new tax structure, placing most items under the 5 per cent and 18 per cent slabs, while remaining goods were categorised under the "sin" category, which will attract a 40 per cent levy. The revised rates, effective from September 22, are expected to reduce the overall tax burden on a broad range of goods and services.

 

 

According to Crisil, the shift from four to two slabs can bring more goods and services under the formal net, which would gradually support tax buoyancy over the medium term. It added that earlier, around 70-75 per cent of GST revenues came from the 18 per cent slab, while the 12 per cent category contributed just 5-6 per cent and the 28 per cent slab accounted for 13-15 per cent.

 

According to Finance Minister Nirmala Sitharaman, 99 per cent of the items in the 12 per cent GST slab have now been moved to the 5 per cent bracket. However, the report noted that lowering rates on items from 12 per cent may not result in significant revenue loss. At the same time, several high-growth sectors, such as telecom services, continue with their existing rates, while new segments, including e-commerce deliveries, have been brought under the 18 per cent slab, the report added.

 

Crisil noted that rate cuts on mass-consumption items could raise disposable incomes, spur demand, and potentially boost collections. It added that the extent to which producers pass on these tax adjustments to consumers will be key in shaping spending patterns.

 

In line with this, many companies have already announced plans to pass on the GST benefits to customers. Sitharaman also said the reforms have infused at least ₹2 trillion into the economy, leaving citizens with more cash in hand.   (With inputs from PTI.)