9th yr of GST may see rate rationalisation
New Delhi: The ninth year of the
Goods and Services Tax
(GST), which begins on Tuesday, could actually see the much-awaited rationalisation of the rates, although the shrinking of slabs from four major ones to three is unlikely.
While the tax regime stabilised over eight years, this is evidenced by consistent rise in collections - from a monthly average of a little over Rs 1.2 lakh crore to more than Rs 1.8 lakh crore - and the number of taxpayers increasing to over Rs 1.5 crore by March-end.
Name any agency or tax expert and rationalisation of tax rates is top item on the wish list. "The next phase of GST must prioritise rationalising rates, reducing blocked credits in line with the neutrality principle, broadening the tax base, and removing procedural bottlenecks to restore the originally intended neutrality and efficiency of the system," consulting firm PwC said in a report released on Monday.
Last week, a survey by Deloitte identified "rationalising GST rates for the entire supply chain" as the second most pressing issue. Although the original plan was to merge the 12% and 18% slabs and create a new one at 15-16%, it seems unlikely, given that some of the items in the 12% bracket will see an increase in rates, a political hot potato. Moving to 5% will entail a significant revenue loss, which neither the Centre nor the states are willing to bear.
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