After over a year of Goods and Service Tax in India and the Lok Sabha elections approaching, the GST Council is on a spree to woo people by easing up the taxation system. After omission of a number of items, the tax authority might soon replace the tax slabs of of 12 and 18% with 14 and 15%.
The GST Council has been trying to off-burden common people from GST rates lately, like in July, the authority made major changes in the tax applied on certain household appliances like mixer-grinders and juicer by bringing it down to just 10% from 28 to 18%. Recently, the Council also exempted sanitary pads and relieved as many as 86 items from high GST slabs. On Thursday, GST Council member Sushil Modi said that the authority might bring down the middle tax slab of 12-18% to 14-15% soon; which will lead to major changes in rates of daily usage commodities and items.
Precisely, if the GST Council actually confirms the decision of merging and squishing down the 12-18% tax slab into a single one with 14-15% revenue, it will reduced prices of items drastically. At present, there are four total GST slabs of 5, 12, 18 and 28 per cent, and then there is the exempted category that attracts 0% GST. According to Sanjay Sanyal, Principal Economic Adviser to the Finance Ministry, these four slabs might be converted to three redefined slabs of 5, 15 and 25 percent soon. Since the middle slabs include most number of items, merging the two will end up inclusion of a lot of goods in 14-15% slab.
Modi also said that the new tax system will be applied to the petroleum products only if the revenue collection exceeds Rs 1 lakh crore target. The lastest tax revenue collection for the last month added up to be Rs 96,483 crore. Earlier in June a total of Rs 95,610 crore were collected revenue. Modi expected a possibility of a downfall in revenue collection in the coming month because of price fall in various (as many as 88) items but again, he added that the revenue would increase at a long time due to more compliance.