‘Bulk of goods might get taxed at 15%; lowest at 5%, top rate to be fixed at 25%’
Goods and Services Tax (GST) slabs may come down to three in addition to the exempted category, in the long-term, said Sanjeev Sanyal, Principal Economic Adviser to the Finance Ministry.
The three slabs could be a low of 5%, a central 15% (merging the 12% and 18% slabs that exist now) and a top rate of 25%, he said at an interactive session organised by the Bharat Chamber of Commerce, here on Saturday.
“In the long term, the GST rates might be squeezed to three as more and more simplification will be done,” Mr. Sanyal said.
Presently, there are four GST slabs of 5, 12, 18 and 28%, plus the exempted category which attracts 0% GST.
He said a bulk of the goods might get taxed in the 15% slab.
Earlier this week, Bihar Deputy Chief Minister Sushil Modi, who also heads high-level Minister Panel on GST, had said that the slabs might come down in the future.
Mr. Sanyal said that after indirect taxes (GST), the government was planning to undertake legal and administrative reforms.
“The inability of the legal system to enforce contracts needs to be addressed and this requires reforms. The administrative reforms are also on the government’s radar,” he added.
He said there had been a slowdown in the Indian economy, which was now beginning to recover.
RuPay, BHIM cashback
Meanwhile, Finance Minister Piyush Goyal said states will roll out incentives for digital transactions made through RuPay card and BHIM app under GST on a pilot basis.
The GST Council, chaired by Mr. Goyal, in its meeting here on Saturday also decided to set up a Group of Ministers (GoM) under Minister of State of Finance Shiv Pratap Shukla to look into the issues of the MSME sector.
Simultaneously, the law and procedure related issues for the sector would be looked into by the law committee of Centre and State tax officers, while tax rate related issues would be looked after by the Fitment Committee of tax officers.
With regard to incentives for digital transactions, Mr. Goyal said that these would be rolled out on trial basis by States that volunteer to do so. “Based on the pilot, we can asses the revenue gain or loss,” he told reporters after the meeting.
The ministerial panel headed by Bihar deputy chief minister Sushil Modi approved the proposal for incentivising digital payments through Rupay card and BHIM app by way of a cash back. Once implemented, customers making payments using Rupay card and BHIM UPI, would get a cashback of 20% of the total GST amount, subject to a maximum limit of ₹100.
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