Possible to merge 12%, 18% GST as revenues rise: Arun Jaitley

The goods & services tax (GST), which completed two years on Monday, is likely to undergo further rationalisation with the merging of 12% and 18% slabs,  Arun Jaitley has said.

 

As revenue increases further, it will give an opportunity to policymakers to possibly merge the 12% and 18% slab into one rate, thus, effectively making the GST a two-rate tax, Jaitley said in a blog post.

 

The former finance minister, one of the architects of the most ambitious tax reforms in the country, said GST had proved to be beneficial for both consumers and tax payers. After two years, one can confidently argue, without fear of contradiction that GST proved to be both consumer and assessee friendly. The high taxation of pre GST era pinched the consumers’ pocket and acted as a disincentive against tax compliance, said Jaitley, who is recovering from an illness and has opted out of the council of ministers. The last two years have seen each of the meetings of the GST Council reducing the tax burden on consumers as the tax collections improved. An efficient tax system certainly leads to better compliance. The 31% tax, which was temporarily 28%, has seen the largest single reform. Most items of consumer use have been brought in the 18%, 12% and even 5% category.

 

This exercise had to be done in a gradual manner as the revenues increased. The cinema tickets, earlier taxed at 35% to 110%, have been brought down to 12% and 18%. Most items of daily use are in the zero or 5% slab. The loss to the revenue on account of this reduction collectively has been more than Rs 90,000 crore annually, Jaitley said.

 

He said India had witnessed one of the smoothest transition to the GST as in most countries governments had lost elections because of rolling out GST. Within the first few weeks of the implementation, the new system settled down. There were a few protests in Surat. The issues were resolved. The BJP won all the assembly seats in the Gujarat poll in Surat. In 2019, the BJP won the Surat seat by the highest margin in the country.