Finance minister Arun Jaitley has hinted that India could go for a single standard GST rate going into the future.
“A future road map could well be to work towards a single standard rate instead of two standard rates of 12% and 18%. It could be a rate at some mid-point between the two,” Jaitley said.
Further adding that such a scenario could materialize only when the revenue from GST collection rises significantly, Jaitley wrote, “The country should eventually have a GST which will have only slabs of zero, 5% and standard rate with luxury and sin goods as an exception.”
The 28 per cent GST slab could be phased out. This comes within days of the GST Council revising downwards the rates of 23 items leaving only 28 items in the highest category of 28 per cent.
In a blog post, Jaitley said, “Today, barring tobacco products, luxury vehicles, molasses, air-conditioners, aerated water, large TVs, and dish washers, all 28 items have been transferred from 28% slab to 18% and 12% slab. Only cement and auto parts are items of common use which remain in 28% slab.”
“Our next priority will be to transfer cement into a lower slab. All other building materials have already been transferred from 28% to 18% and 12%. The sun is setting on the 28% slab,” he added.
On the GST revenue collection which has come under criticism as the government had set a target of collecting Rs one lakh crore monthly, Jaitley said, “This increase in the tax collection has to be factored keeping in mind the significant rate reduction which has taken place in the GST. The reduction in monetary terms amounts to about Rs.80000 crores per year. Notwithstanding the substantial tax reduction, the GST collection in the first six months of this year has shown a significant improvement as compared to the first year. The average monthly tax collected in the first year was Rs.89700 crore as compared to Rs.97100 crore per month in the second year.”
In a veiled attack on the opposition which has criticised the patchy implementation of the GST, Jaitley said that the single tax system has greatly reduced the plethora of taxes that an entrepreneur had to deal with. Instead of filing 17 returns and dealing with 17 inspectors, GST has brought all the taxes under one roof.