Arun Jaitley hints at cutting down GST rates on items in 28% tax slab
New Delhi, Nov 7: Finance Minister Arun Jaitley hinted at pruning the list of items in the highest GST tax bracket of 28 per cent after revenue in the new regime equalise collections previously.
Under the Goods and Services Tax (GST), implemented from July, over 1,200 products and services have been fitted into one of the four tax slabs -- 5, 12, 18 and 28 per cent.
The rates were based on the principle of keeping the total tax incidence at almost the same level before the new indirect tax regime kicked in as also keeping revenue collections neutral. Jaitley said some of the items should never have been in the 28 per cent slab and the GST Council in the last 3-4 meetings has slashed rates on over 100 items, thereby bringing them down either from 28 per cent to 18 per cent or from 18 per cent to 12 per cent. "We have been gradually bringing them down.
The whole idea is, as your revenue collections neutralise we must prune it and that's the pattern in which the Council has so far been functioning. I see that as a future guide as far as the Council is concerned," Jaitley said at the India Today Conclave here.
The GST Council is scheduled to meet on November 10 and may consider lowering tax rates on a host of goods such as handmade furniture, plastic products and daily use items like shampoo. The Council last month approved an Approach Paper to be followed by the fitment committee while deciding on future rate revisions. A top government functionary said the idea is to have two GST slabs besides one of 28 per cent for some luxury items.
While the entry slab will remain at 5 per cent, the government envisions merging 12 per cent and 18 per cent slabs into one in future, he said. Going for two slabs in the initial stage would have been inflationary, he said, adding that items in 28 per cent slab would be thinned out gradually.
He, however, did not put any timeline to these moves. Jaitley said consumers are noticing the tax paid on goods they buy in the GST regime as previously excise duty was embedded in the price of the product.
The GST regime has subsumed more than a dozen central and state levies including excise duty, service tax and VAT. Jaitley said the product, in the previous regime, "didn't show you are paying so much excise (duty)".