The GST Council may consider boosting the lowest tax rate to 8 percent from 5 percent at its next meeting, as well as pruning the exemption list, in order to boost collections and reduce states' reliance on the Centre for compensation in the Goods and Services Tax regime, source said on Sunday.

A group of state finance ministers is expected to deliver a report to the Council by the end of the month, recommending a variety of revenue-raising measures, including raising the lowest slab and rationalising the slab. GST is currently a four-tiered system with tax rates of 5, 12, 18, and 28 percent. Essential items are excluded or taxed at the lowest rate, whereas luxury and depreciation products are charged at the highest rate. On top of the maximum 28 percent slab, luxury and sin items attract a cess. This levy is used to compensate states for revenue losses as a result of the GST implementation.

The GoM is expected to propose boosting the 5 percent slab to 8 percent, which might result in an additional Rs 1.50 lakh crore in yearly revenue, according to sources. According to calculations, a 1 percent increase in the lowest category, which primarily includes packaged food goods, translates in an annual revenue increase of Rs 50,000 crore.

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