Even though the government wants to improve demand, there are no proposals to bring GST on essential items down.
While revenue collections are dipping for the government, the Finance Ministry is not in favour of hiking goods and services tax (GST) rates on non-essential items in the upcoming GST Council meet which is slated for June, The Indian Express cited unidentified government sources as saying. Instead, the government is now focussing on reviving the demand which has been pushed down further by the coronavirus pandemic. However, even though the government wants to improve demand, the sources hinted that as of now, there are no proposals to bring GST on essential items down. The decision ultimately resides with the GST Council and not with the central government.
“After the lockdown is lifted demand for everything has to revive and not just essential items. Demand from all sides, for all goods, has to be induced. That is important as the government wants to revive the economy,” the sources said. If the government imposes higher tax slabs on non-essential goods, that will be further detrimental to the demand and put a spanner on the overall economic recovery.
The country has been under a lockdown since 24 March 2020 due to a coronavirus pandemic and the lockdown has taken a heavy toll on demand production in nearly all sectors. “Nobody knows how this COVID-19 pandemic pans out, what shape it is going to take, what kind of impact it will have on the Indian economy, and globally also no country knows today what lies three months later,” the sources said, adding that the government will take decisions on the basis of how situation pans out in the future.
In the upcoming meet which will be attended by finance ministers of all the states, tax rates are likely to be discussed, the sources added, the national daily reported. The latest GST Council meet was held in March in which the members proposed rationalisation of taxes on many items.