New Delhi, November 21: Chief Economic Adviser Arvind Subramanian on Tuesday said that the government may consider combining the 12 per cent and 18 per cent slabs for goods and services tax (GST) into one in the coming months. Subramanian further said that the 28 per cent rate may be reserved only for demerit goods in the near future. It has to be noted that the demerit goods are goods whose consumption is considered unhealthy. They include tobacco, alcoholic beverages, recreational drugs, gambling, and junk food among others. Due to the nature of these goods, governments often levy taxes on these goods (specifically, sin taxes), in some cases regulating or banning consumption or advertisement of these goods.Also Read - Swiggy, Zomato Will Now Pay GST on Restaurant Services Supplied Through Them, Says Sitharaman
According to a report by Economic Times, Subramanian said India will never move to a single GST rate and as time passes there would be a ‘poor man’s’ rate which would be 0 per cent and 5 per cent, a core rate which would be the 12 per cent-18 per cent combination, and the demerit rate which is 28 per cent. Also Read - Ordering Food Through Zomato, Swiggy To Become Costly Soon As Govt Panel Moots GST On Aggregators
The IIM-Ahmedabad and Oxford-educated Subramanian, while speaking to ET said that he never liked the 28 per cent slab as it created some of the transitional challenges. He feels that 28 per cent just should be just kept for demerit goods. “0 per cent and 5 per cent have quite a lot of the tax base and there I think we will not be able to make that much progress as we have to protect the poor. But the 12 per cent and 18 per cent, at some point, can be combined in the foreseeable future into one rate,” he added. Also Read - Central Govt Panel Plans to Bring Petrol, Diesel Under GST: Report
The chief economic adviser, whose tenure as CEA was recently extended by a year further added that GST collections were not doing badly and the government would take a call on the overall fiscal situation in a few weeks. “I think we are certainly heading in the right direction (on the GST structure),” Subramanian was quoted by ET.
On November 16, Subramanian had hinted at further rationalisation of the five-tier goods and services tax (GST) structure. In the coming months, bringing more items under the GST structure and further simplifications are going to be considered by the GST Council. As many as 178 items out of the total 227 goods and services in the top 28% bracket were placed into the standard 18% rate slab. The GST Council also agreed to levy only a 5% GST on eating at restaurants, other than the five-star hotels, from November 15.