 "GST")
The goods and services tax (GST) Council may, in future, decide to reduce the tax slabs under the GST regime after analysing the revenue garnered and the compensation payouts to states, a top official said on Thursday.
With industry demanding lowering of proposed GST rates of five per cent, 12 per cent, 18 per cent and 28 per cent after demonetisation, the Central Board of Excise and Customs (CBEC) Chairman Najib Shah said the Centre and the states at present collect Rs 8 lakh crore from indirect taxes - minus Customs duty — and the same level of revenue has to be collected in the GST regime.
Any change in tax slab is possible after assessing the revenues, the effect of exemptions and deductions given in the new tax regime, and analysing it with the expenditure. “Once we see how much money is collected from these taxes, we can certainly look at the rates. It is not cast in stone. The GST Council has complete flexibility to do so and will do so I am sure,” Shah said.
In November, the GST Council, which is headed by Union Finance Minister Arun Jaitley and has state representatives, agreed on the four-slab structure along with a cess on luxury and ‘sin’ goods such as tobacco. “The central government has committed to compensating the states for five years. Now it is a huge burden which the central government has cast upon itself. The underlying theme is GST will increase revenues and the need for compensation perhaps will be lesser,” he said. Shah added the GST Council has to take into consideration the range of products under GST and the political compulsion of every state, while taxing them. Currently, the VAT and excise duty on commodities range from six per cent to 300 per cent on sin goods.
“Where do we get the money from, if we don’t have the flexibility to have rates? The task of fitting a product to a rate is easier said than done. How do we still give money after giving exemptions? The multiplicity of rate is a necessity — both economic and political. Should we reduce that number from five to three to two? Once we see how much money is collected from these taxes, we can certainly look at the rates,” Shah said. He said the officers committee has already started work on which goods are to be placed in which tax bracket and the final call would be taken by the GST Council.
Dismissing suggestion of having single-rate GST as in the European Union (EU), he said the wide range of products and their varied taxation rates make it imminent to have a multiple tier-tax structure. “How can you possibly have one rate for edible oil and car or for atta and computers? We cannot have one rate. We can reach one rate 20 years down the line. The EU, several countries have one rate of 18/20 per cent. Will that be acceptable to us? No. We have to have multiple rates,” Shah said.
