Ahead of the Goods and Services Tax (GST) Council meeting on December 22 where the 28% tax slab is expected to be pruned further, prime minister Narendra Modi on Tuesday said his government wants to ensure that 99% items attract GST rate of 18% or less.
“Today, the GST system has been established to a large extent,” he said adding that the 28% slab of GST would only be restricted to a few select items, such as luxury goods.
Since the rollout of GST from July 1 last year, the GST Council has undertaken four rounds of rate rationalisation — October 6, November 10, January 18 and July 21. While initially 178 items out of a total 1,211 items in the tax net were under the highest slab of 28%, only 37 items or just 3% of the goods and services under GST currently attract the highest rate.
Overall, tax rates on nearly 350 items have been brought down since November last year, which is estimated to cause loss of Rs 70,000 crore in annual revenue to the government.
In the 8 months of this fiscal, the average monthly GST collection has been around `97,000 crore, while for the Centre to meet its budget target for GST revenue, average monthly collections through the year should be `1.12 lakh crore.
At the time of fitment of goods and services in the various GST slabs in May last year, which was based on principle of revenue neutral rate, 7% of items were exempted, 14% of the items were kept in the 5% GST slab, 17% of goods and services were taxed at 12% GST and about 43% items were in 18% tax slab. The remaining 19% items were placed in the highest bracket.
Before implementation of the GST, registered enterprises only numbered 65 lakh, which has now risen by 55 lakh, Modi said. “We are of the opinion of making GST as smooth as possible for the enterprises,” he said.
“In earlier days, the GST was framed according to the existing VAT or excise tax structures exercised in those respective states. (With) the discussions held from time to time, the tax system is getting improved,” Modi said.
“The country was demanding GST for decades. I am pleased to say that GST implementation has removed contradictions in the trade market and efficiency of system is improving. The economy is also getting transparent,” Modi said.