If the proposal comes through, all the goods and
services which are currently taxed at 12 per cent, will
move to 18 per cent slab.
Besides, the GoM would also propose reducing the number
of items which are exempted from GST. Currently,
unpackaged and unbranded food and dairy items are
exempted from GST.
Sources said the GST Council is expected to meet later
this month or early next month and discuss the report of
the GoM and take a view on the revenue position of the
With the GST compensation regime coming to an end in
June, it is imperative that states become
self-sufficient and not depend on the Centre for
bridging the revenue gap in GST collection.
At the time of GST implementation on July 1, 2017, the
Centre had agreed to compensate states for 5 years till
June 2022, and protect their revenue at 14 per cent per
annum over the base year revenue of 2015-16.
However, over this 5-year period due to reduction in GST
on several items, the revenue neutral rate has come down
from 15.3 per cent to 11.6 per cent.
"As the revenue neutral rate has come down and the
states stare at a shortfall of about Rs 1 lakh crore,
efforts have to be made to make GST revenue neutral and
the only way to do it, is rationalise the tax slab and
check evasion," a source said.
The GST Council over the years has often succumbed to the
demands of the trade and industry and lowered tax rates. For
example, the number of goods attracting the highest 28 per
cent tax came down from 228 to less than 35.
The Council, chaired by the Union Finance Minister and
comprising state counterparts, had last year set up a panel
of state ministers, headed by Karnataka Chief Minister
Basavaraj Bommai, to suggest ways to augment revenue by
rationalising tax rates and correcting anomalies in tax
Source::: THE ECONOMIC TIMES,