No more 12%, 18% GST slab? Here’s what FM Jaitley says could happen

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Published: December 24, 2018 5:58:55 PM

The GST currently has five tax slabs — 0%, 5%, 12%, 18%, and 28%. With the latest round of rate rationalisation, only 28 items left in the 28% bracket.

The GST currently has five tax slabs — 0%, 5%, 12%, 18%, and 28%. With the latest round of rate rationalisation, only 28 items left in the 28% bracket.The GST currently has five tax slabs — 0%, 5%, 12%, 18%, and 28%. With the latest round of rate rationalisation, only 28 items left in the 28% bracket.

After a massive rate rationalisation on Saturday, bringing several items into lower GST rate brackets, Finance Minister Arun Jaitley has now given an insight into the future of the indirect tax regime said that 12% and 18% tax brackets may be merged into one.

He said that India will eventually have a standard tax rate, which can be created by merging 12% and 18% tax rates, for commonly used goods. However, this does not mean a single GST rate. Essential items will continue to be taxed at 0% and 5%, while luxury, sin and demerit goods will attract a higher tax rate.

In a Facebook post, Arun Jaitley said, “A future roadmap could be to work towards a single standard rate instead of two standard rates of 12 per cent and 18 per cent… It could be a rate at some mid-point between the two.

Obviously, this will take some reasonable time when the tax will rise significantly. The country should eventually have a GST which will have only slabs of zero, 5 per cent and standard rate with luxury and sin goods as an exception.”

In August this year, Bihar Deputy Chief Minister Sushil Kumar Modi had also said that the GST Council would consider merging 12% and 18% slab into one 14-15% tax slab once collections stabilise at Rs 1 lakh crore per month. However, the government has not been able to touch the Rs 1 lakh crore mark and is actually staring at a shortfall.

The GST currently has five tax slabs — 0%, 5%, 12%, 18%, and 28%. With the latest round of rate rationalisation, only 28 items left in the 28% bracket.

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