New Delhi – Finance Minister, Shri. Aruj Jaitley confirmed that the people could expect fewer slabs in future under the goods and services tax (GST) reform once the entire system settles downs. The GST came into a picture from 1st July 2017.
He spoke about the GST and the tax slabs in a summit organized by The Economist in the national capital. Mr. Jaitley said that the GST council, who is supposed to take all the decisions on the matters related to the indirect tax might take into consideration of merging the different tax slab of 12% and 18% and thus come up with some standardization where we have one rate.
He mentioned that he does see the GST Council to take appropriate decisions on GST tax slabs by bearing in consideration the impact of inflation as well. But he also mentioned that this is only going to happen if the entire transition remains smooth and the tax compliance activities by the people remain high and healthy.
He said that the GST council currently had kept four different rates, i.e., 5%, 12%, 18% and 28% rather than a single standard rate so that they could take care of everyone as people of various ages and fields lie in various income brackets. There is so much income diversity in India that currently, it is impossible to tax luxury cars and items that come from the daily consumption to be charged at the same tax rate. The minister confirmed that the council right now kept most of the products in the lower tax rates of 5% and 12% only. This help is curbing inflation as the GST implementation then did not have a significant impact on the price rise.
The minister confirmed that the council right now kept most of the products in the lower tax rates of 5% and 12% only. This help is curbing inflation as the GST implementation then did not have a significant impact on the price rise.
Mr. Pratik Jain, partner and leader at PWC confirmed that reducing the number of GST slabs in future is going to be a welcome step and would lead to further development. In future, he added the 12% and 18% slabs are expected to collapse, and the items that come under the purview of 28% slab are expected to trim down or thin down to simplify the GST reform.
The indirect scheme, GST has brought in a lot of revenue collections for the government, and it is only going to increase with time. This is expected to eventually increase the government’s ability to spend a bit more on the development schemes, which is going to help build the Nation and take it towards a developed economy.
Even as 66% of the GST assesses remitting taxes for July, the collection for the first month of the roll out of the popular tax reform (excluding those who had subscribed for a liberal quarterly payment scheme), exceeded the target and the expectations of both the union and the state government for the month of July.
In July, ₹ 92,283 Crores were received as GST receipts from approximately 3.9 million tax payers. The target and the expectations of the collections were somewhere around ₹ 91,000 Crore. In the summit, Mr. Jaitley also pointed out the direct tax base was also amplifying and thus he expects to see a tax-to-gross domestic product (GDP) ratio of around 11.3% by the end of the financial year 2017-18.