Nirmala Sitharaman today said that only 29 items are in the 28% tax rate and the loss of revenue, due to the reduction in rates has been more than Rs 1 lakh crore annually.
Finance Minister Nirmala Sitharaman today listed out the benefits of GST in the last three years. Remembering former Finance Minister Arun Jaitley on his first death anniversary, the FM said that GST, which was implemented by the late minister, has reduced the rate at which people have to pay tax and it has helped increase compliance and doubled the taxpayer base to 1.24 crore. She added that there are 480 items in the nil or 5 per cent tax rate, 221 items are at 12 per cent, and 607 items in the 18 per cent rate. Only 29 items are in the 28 per cent tax rate and the loss of revenue, due to the reduction in rates has been more than Rs 1 lakh crore annually, FM further said.
The office of FM Sitharaman today tweeted that more than 35 items, which fell in the 28 per cent slab when the tax regime was rolled out, are now in the 18 per cent slab. The slab for seven items has been brought down from 28 per cent to 12 per cent while that of six others has come down to 5 per cent from 28 per cent.
The finance ministry underlined that the revenue-neutral rate as per the RNR (Revenue Neutral Rate) Committee was 15.3 per cent, which is now slashed to a mere 11.6 per cent. Also, businesses with an annual turnover of up to Rs 40 lakh are GST exempt, which was only for businesses up to Rs 20 lakh initially. It added that businesses with a turnover up to Rs 1.5 crore can now opt for the Composition Scheme and pay only 1 per cent tax.
Regarding the items places under the 28 per cent tax slab, the ministry further said that as of now, the 28 per cent rate is almost solely restricted to sin and luxury items and out of a total of about 230 items in the 28 per cent slab, about 200 items have been shifted to lower slabs. Specifically mentioning the housing sector which is under severe stress amid the coronavirus pandemic, FM Sitharaman-led ministry said that the housing sector has been placed in the 5 per cent slab, while GST on affordable housing has been reduced to 1 per cent.