No more 12%, 18% GST slab? Here’s what Sushil Modi says GST Council may do

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Updated: August 4, 2018 12:10:50 PM

GST Council member and Bihar Deputy Chief Minister Sushil Kumar Modi said that the GST Council is looking to replace two tax brackets 12% and 18% with 14-15%.

No more 12%, 18% slab? Here's what GST Council is planning to doNo more 12%, 18% slab? Here’s what GST Council is planning to do

GST Council member and Bihar Deputy Chief Minister Sushil Kumar Modi said that the GST Council may replace two tax brackets 12% and 18% with 14-15% if tax collections stabilise at Rs 1 lakh crore. Speaking at a seminar, Sushil Kumar Modi said that further rate rationalisation will likely be taken up once revenue reaches Rs 1 lakh crore.

The GST collection in June came close to Rs 1 lakh crore, falling short of nearly Rs 3,600 crore. However, after recent rate cut on over 100 items including up to 10% on white goods, the collections may take a hit, experts say. In April, the collections did hit Rs 1 lakh crore mark but also included arrears of the previous months.

The GST currently has five tax slabs — 0%, 5%, 12%, 18%, and 28%. The government has often hinted at more rate rationalisation once there is revenue buoyancy and that 28% tax slab will be limited to only sin and demerit goods. After rate rationalisation on July 21, only 35 items have been left in the highest tax bracket.

Experts have often advocated for fewer tax slabs, saying that merging 12% and 18% tax slab into a 16% slab would make it easier and will reduce the possibility of interpretation.

Meanwhile, the Sushil Modi-led ministerial panel has approved a proposal for incentivising digital payments through Rupay card and BHIM app by way of cashbacks. The recommendations of the Group of Ministers (GoM) is set to be placed before the GST Council on Saturday.

The Council had in its meeting on July 21 tasked the GoM to work out modalities for incentivising digital payments under Goods and Services Tax (GST) for users of Rupay and BHIM.

The GST Council may also decide on increasing import duty on white goods with an aim to create a level playing field for domestic manufacturers.

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