Chief Economic Adviser (CEA) KV Subramanian has said that rationalisation of GST rate structure is on the government's agenda and it is definitely going to happen. CEA Further, a 3-rate structure is very significant and there is also a need to fix inverted duty structure as far as the GST is concerned.
The Goods and Services Tax (GST), which amalgamates more than a dozen central and state levies like excise duty, service tax and VAT, was introduced in July 2017. GST currently has five rate structures -- 0.25 percent, 5 percent, 12 percent, 18 percent and 28 percent. To a question, if rate structure rationalization under GST is needed, Subramanian said, "I think that's something definitely going to happen. The original plan was to have a three-rate structure.
But I think what we have to be very cognizant about is that oftentimes with policymaking you don't want perfect to actually become the enemy of the excellent." A majority of common-use items have been exempted from GST, while 28 percent tax is levied on luxury, demerit and 'sin goods'. "The GST, the way it got created with actually five rates was basically excellent because now we are seeing the impact on GST's amounts,” Chief Economic Adviser said.
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