Indicating that further simplification of the Goods and Services Tax is on the anvil, Prime Minister Narendra Modi said his government wants to ensure that '99 percent things' attract sub-18 percent GST slab.
The GST council is scheduled to meet on December 22. The Prime Minister indicated that the 28 percent slab of GST would only be restricted to a few select items, such as luxury goods.
There were around 226 goods in the 28 percent category, when the GST was implemented on July 1, 2017.
In its July meeting, the GST Council had further rationalised the 28 percent slab by cutting rates on paints and varnishes, and on daily-use items like perfumes, cosmetics, toiletries, hair dryers, shavers, mixer grinder, vacuum cleaners, lithium ion batteries, and cut rates to 18 percent.
The 35 goods, which are left in highest slab include cement, automobile parts, tyres, automobile equipments, motor vehicles, yachts, aircrafts, aerated drinks, betting and demerit items like tobacco, cigarette and pan masala.
Manpreet Singh Badal, finance minister, Punjab; Thomas Isaac, finance minister, Kerala and Aditi Nayar, principal economist, ICRA, on the expectations from the GST council meeting this week.
Badal said, “I personally feel that the GST council should not be a forum of populist policies and if there are any rate cuts, the Congress has advocated against 28 percent slab but then a holistic view must be taken; some financial implications and so on.”
On rate rationalisation, Isaac said the commodities that are consumed by poor people should be rated at a very low rate or exempt from the tax bracket.
The note that ICRA published put today is highlights the key risks on the states’ fiscal health in FY19, Nayar said on ICRA report.
“Our forecast is that the states have been able to garner Rs 3.4 trillion of SGST after IGST settlement which is closer to 70 percent of the Rs 4.9 trillion that they budgeted. So the risk is that CGST collections will fall short of the government's estimates and therefore central tax revolution will also be lower,” she added.
First Published: IST