You are here: Home » Economy & Policy » News » GST
Business Standard

The GST structure may be in for an overhaul

Some items will also be removed from the GST exemption list that attracted some form of taxation in the pre-GST regime

Topics
GST revenue collection | GST rates | May GST collections

Kanishka Gupta  |  New Delhi 

In an attempt to amp up the revenue collection, the GST Council is likely to decide on overhauling the rate structure next week. Well, the consumers must brace themselves for higher goods and services tax (GST) rates from April 1, 2020, then.

So, proposals put forward by the Centre advise raising the 5 per cent slab, which covers mainly essential commodities such as basic clothing and food items, to anywhere between 6 and 8 per cent, and doing away with the 12 per cent slab which currently contributes 13 per cent to the GST revenue.

Now understand, increasing the 5 per cent slab to 6 per cent will mean additional revenue of Rs 1,000 crore per month, assuming GST collection of Rs 1 trillion, while raising it to 8 per cent will mean additional mop-up of Rs 3,000 crore.

However, a few states may oppose such a move because it involves hiking tax on items consumed by the poor. They have instead proposed raising the 18 per cent slab, which contributes 60 per cent to the revenue.

Kerala Finance Minister Thomas Isaac told Business Standard that the proposal of tweaking the lower slabs would be strongly opposed. “It is a bizarre proposal. I will not accept increasing tax burden on the poor. It will be injustice,” he said, adding “Raise the upper slab, if needed.

The 18 per cent slab can go up to 22 per cent or to 25 per cent,” said Isaac. This means an additional mop up of Rs 13,000 crore per month.

Bihar Deputy Chief Minister Sushil Modi also said raising the 5 per cent slab would not help meet the objective. “Although I would not like to comment on the matter till a final proposal comes, but hiking the 5 per cent slab will make little difference.

It is touching the 18 per cent slab which may help, but difficult to say if it’s feasible,” he said.

However, Punjab has proposed a two-slab formula of clubbing the 5 per cent and 12 per cent slabs, and merging 18 per cent and 28 per cent to simplify the GST rate structure and improve revenues.

However, officials added that whatever changes would come into effect will be from the next financial year onward to make the process least inconvenient to industry.

Besides, M S Mani, partner, Deloitte India, said a change of slabs across the board or a change of rates for specific products would require businesses to make significant changes across their value chain and, hence, sufficient time should be given to industry if these changes were necessary.

What’s more, some items will also be removed from the GST exemption list that attracted some form of taxation in the pre-GST regime. Items like curd, lassi, soyabean oilseeds, kajal, coconut fibre, and printed books attracted 6 per cent value added tax, but have been exempt under GST.

The need to re-examine the GST slabs arose as the cess collection under GST has fallen short of the requirement to meet states’ compensation requirements. The Centre has not compensated states for the last four months. Kerala and Punjab have threatened to move the Supreme Court, challenging the non-payment of dues. To know more, listen to this podcast...

MONTHLY STAR

Business Standard Digital

Business Standard Digital Monthly Subscription
149.00  
subscribe
Complete access to the premium product
Convenient - Pay as you go
Pay using Master/Visa Credit Card & ICICI VISA Debit Card
Auto renewed (subject to your card issuer's permission)
Cancel any time in the future
Requires personal information

What you get?

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.

NOTE :

  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to assist@bsmail.in. Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.

SMART MONTHLY

Business Standard Digital

Business Standard Digital - 12 Months
1499.00
subscribe
Get 12 months of Business Standard digital access
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice - Credit/Debit Cards, Net Banking, Payment Wallets accepted
Exclusive Invite to select Business Standard events

What you get

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment - hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.

NOTE :

  • This product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the mail with the request to assist@bsmail.in. Include your contact number for easy reference. Requests mailed to any other ID will not be acknowledged or actioned upon.
First Published: Wed, December 11 2019. 14:12 IST
RECOMMENDED FOR YOU