Lowest GST Slab Will Be Increased To 8% From 5%? Only 3 GST Slabs For All Businesses?
In a recent development, sources cited on Sunday that in the upcoming GST Council meeting, the members could discuss raising the lowest tax slab from the current 5% to 8% in order to increase revenues and get done with the state governments depending on the Centre for compensation.
In a recent news report, chances of the Govt discussing raising the lowest tax slab can become a reality.
GST Council Recent Meeting
At present, the Goods and Services Tax regime is a four-tier structure, with tax rates of 5%, 2%, 18% and 28%.
While essential items are taxed at the lowest tax bracket of 5%, items like luxury goods and demerit items are charged with the highest tax slab, attracting a cess on the 28% bracket.
These cess charges on the tax bracket are used to make up for the revenue lost during compensation of states due to GST rollout.
As per sources in knowledge of the matter, a panel of state finance ministers could propose to hike the lowest tax slab of 5% to 8%, which could yield an additional Rs 1.5 lakh crore annual revenues, stated a report.
Calculations suggest that an increase in the lowest tax slab by even 1% could lead to a revenue jump of Rs 50,000 crore annually.
GoM Could Eye At a 3-Tier GST Structure
As mentioned above, the Indian GST regime is a four-tier structure. However, the GoM is also looking towards a 3-tier GST structure, clustering the tax slabs at 8%, 18% and 28%.
If the proposal is converted into reality, all the goods and services that are taxed at 12% currently will get taxed at the 18% slab.
Sources said the GST Council is expected to meet later this month or early next month and discuss the report of the GoM and take a view on the revenue position of the states, added the report.