Govt. May Increase 5% GST Slab To 6%; Govt Plans To Extract More Tax Revenues From You!
As per the reports, the Goods and Services Tax (GST) council may consider a hike in tax structure and could increase the existing 5% rate to 6% to shore up the shortfall in GST collections.
The council may reach this decision in lieu of the growing revenue concerns.
How Will This Help?
This move in turn the slab restructuring is expected to help the government in garnering additional revenues of around Rs 1,000 crore per month.
Currently GST has four tax slabs which are 5%, 12%, 18% and 28%. Where the lowest tax slab of 5% is applicable to essential commodities like food items, basic clothing and footwear.
Considering the government statistics, this 5% slab contributes to nearly 5% of GST collection.
So far the monthly GST collection target for government is around Rs 1.18 lac crore.
What Will Happen Next?
On 18 December, the GST panel, which is comprising finance ministers of states and also chaired by the union finance minister will meet.
The agenda for this meeting is to examine various measures to boost revenue collection, including review of the tax structure, compensation cess rates and exempted items.
Also the GST Council secretariat has asked inputs from states on all these issues at the next meeting, as per the information given by Business Standards.
What Is the Vision Behind This Move?
According to government official “An idea that has emerged is increasing the 5 per cent slab to 6 per cent, which will mean 3 per cent GST each for the Centre and states. Some states are arguing that this will mean a 20 per cent increase in the tax rate. But in value terms it will not be much,”.
As per the report, the government is facing a crisis due to the constant decrease in GST collections witnessed. (Reference)
In a bid to resolve the crisis, the government had come up with a committee of officers to suggest measures to boost collections and make businesses comply voluntarily during the October month this year.
Who Is Part Of This Committee?
The committee comprises of commissioners from state GST council of Tamil Nadu, West Bengal, Maharashtra, Uttar Pradesh, Punjab along with Joint Secretary and Executive VP of GST Council.
This committee was formed in September when GST collections has seen a steep fall reporting a 19-month low of Rs 91,916 crore revenue.
During October month, the tax collections reported at Rs 95,380 crore.
While next month GST collection shown an improvement by crossing crossed Rs 1 lakh crore mark to Rs 1.03 lakh crore in November.
Currently GST revenues showing an improvement with a positive growth of 6 percent on a yearly basis during the month under review, after two months of negative growth.