GST:3-tier rate structure could be announced as soon as next financial year, says report
GST:3-tier rate structure could be announced as soon as next financial year, says report

The upcoming few meetings of the GST Council would take India’s new indirect tax regime closer to the goal of providing a transparent tax system with minimal exemptions and fewer rates.

 Sources privy to the amendment on the GST rate rationale said that a three-rate tax structure may become a reality early next fiscal after the views of a group of ministers (GoM) set for purpose is presented before the GST Council. The idea is, sources said, to move away from the present broad five rate structure of zero, 5, 12, 18 and 28 percent to just three of 5, 18 and 28 percent. There would be a small list of exempted items while certain demerit goods could continue to attract higher duty levels. The lowering rates into three slabs would be done by merging two existing slabs (12-18 percent), and progress in this direction would be made in phases with rate changes cleared by the GST Council before a three-rate structure is placed for all items.

Chief Economic Adviser in the Union finance ministry Krishnamurthy Subramanian has also said that the big reform in GST rates would be undertaken soon as was envisaged earlier. India has four primary GST rates of 5 percent, 12 percent, 18 percent, and 28 percent. There is also a cess on luxury and demerit goods such as automobiles, tobacco and aerated drinks. On precious stones and metals, special rates of 0.25 percent and 3 percent, respectively, are applicable. A proposal to merge the 12 percent and 18 percent slabs into a single rate has been discussed for several years. It was expected that a move in the direction would be taken in FY21.

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