New Delhi: The GST Council is expected to reduce the current four tax slabs of 5 per cent, 12 per cent, 18 per cent, and 28 per cent to just three tax slabs with rates of 8 per cent, 18 per cent, and 28 per cent each, stated a report quoting anonymous government sources. If implemented, the government would be able to increase their tax revenue by raising taxes on products and services used primarily by the wealthier section of society, added the report.
Some of the products which will be taxed heavily are branded cereals, mobile phones, pizzas, air travel, air-conditioned rail travel, cruises, high-end hospital rooms, paintings, branded garments, and fine fabrics such as linen and silk, stated a report by the Dailyhunt quoting government officials. According to one source, the government is considering to boost their GST revenue by raising the tax rates on these items from 5 per cent or 12 cent to 8 per cent or 18 per cent. Whereas the other official was reported as saying that the government may reduce the number of GST tax slabs in order to simplify the GST regime.
Notably, in recent months, there has been a slowdown in the Goods and Services Tax (GST) collection. Taking stock of this situation, a Parliamentary panel on finance on Tuesday asked the government to keep a check on the misuse of the input tax credit. The report submitted by the Standing Committee on Finance to the Parliament hinted at a possible resetting of GST rates and tax slabs by the government. In order to evaluate the smooth operation of GST, the revenue department was asked to obtain feedback from taxpayers. Besides, a suggestion was made in the Parliament to bring the interest component of tax refunds in the Union Budget so that it passes through parliamentary scrutiny. Further, the government was asked to broaden the tax base, by introducing a new Direct Tax Code.
On Sunday, Finance Minister Nirmala Sitharaman had pointed out at the distorted condition of the GST rate structure following a series of rate reductions. Sitharaman was quoted by the Hindustan Times as saying, “I am not saying that people did it thoughtlessly, but in the enthusiasm to reduce taxes, that framework which was originally agreed at Stage One of GST was distorted.”
(With agency inputs)