Higher GST Rates will increase revenue
ST Council meetings have usually focused on cutting rates for products but that routine may come to a halt as revenue collection under the indirect taxation system has dropped drastically.
When the GST Council meets in the second fortnight of December, it is likely to discuss ways to shore up revenue and it could result in some exempted items could make a comeback under taxation while some items could be moved to a higher GST slab, reports indicate.
The development comes particularly after Centre failed to pay GST compensation cess to at least five states.
Quoting top sources, the publication said the base slab of five per cent will be increased to 9-10 per cent while the 12 per cent tax slab will be removed.
At least 243 items could now find itself in the 18 per cent bracket, added the report. The move will lead to an additional burden on customers but will help boost revenue collection by almost Rs 1 lakh crore.
Meanwhile, GST on several finished goods will also witness a rise as Centre is looking to rectify the inverted duty structure where inputs and raw material attracts a higher duty than the finished products.
The government, on the other hand, suggested that the rise would result in minor inflationary pressure. But economists are of the view that recalibrating GST rates would require time and it could lead to further instability.
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