The goods and services tax (GST) rates and slabs are likely to be raised during the upcoming GST Council meeting, which is scheduled to be held on next week, following the pressure on revenue collection. As per the reports, the Council can also explore the possibility of merging the tax slabs to bring down the number of segments from four to three i.e. 8 per cent, 18 per cent, and 28 per cent.
The meeting will be chaired by the Finance Minister Nirmala Sitharaman on December 18 in the backdrop of lower-than-expected GST collection and pending compensation to many states.
Currently, there are four slabs under the GST i.e. 5, 12, 18 and 28 per cent. Goods and services under the 28 per cent category also attract cess over and above the rate, which ranges between 1 and 25 per cent.
A group of officers from the Centre and states, met on Tuesday to finalise recommendations for rate rationalisation, is believed to have considered various options including raising rates from 5 per cent to 8 per cent and 12 per cent to 15 per cent, sources quoted as saying by the Press Trust of India (PTI).
It is believed that a detailed presentation on rate rationalisation will take place during the meeting. The council is also likely to revisit exemption list and explore whether cess can be levied on some services, PTI report added.
During the April-November period of 2019-20, the Central GST (CGST) collection fell short of the Budget Estimate by nearly 40 per cent, as per government data. The actual CGST collection during April-November stood at Rs 3,28,365 crore, while the Budget Estimate is of Rs 5,26,000 crore for the specified time period.
The CGST collection in the year 2018-19, stood at Rs 4,57,534 crore as against the estimate of Rs 6,03,900 crore for the year, and in the year 2017-18, the CGST collection was at Rs 2,03,261 crore.
With a slip in country’s GDP to a 26-quarter low of 4.5 per cent in the Q2 of the ongoing financial year and its negative impact on the manufacturing sector, the compensation requirements have increased significantly and are unlikely to be met from the compensation cess being collected.
The last time GDP grew at a slower pace was in the fourth quarter of 2012-13, when it had expanded only 4.3 per cent.
The discussion over the compensation is quite critical as lower GST and compensation cess collections have been a matter of concern in the past few months, according to a letter written by the GST Council to commissioner, SGST, of all states.
In this regard, the Council has sought suggestions or inputs as regards measures, on compliance as well as rates that would provide a boost in the revenue.
(With input from agencies)