National Institution for Transforming India (NITI) Aayog Vice-Chairman Rajiv Kumar said on Wednesday that the average rate of Goods and Services Tax (GST) will soon be 15 percent.
The statement comes a days after PM Narendra Modi‘s announcement about bringing 99 percent of the items under the sub-18 percent GST slab.
A GST Council meeting is to be held on December 22 to prune down the list of all items to be under the 28 percent GST slab.
As of now, 1,211 goods categories have been synthesized into six rates – 0.25 percent (un-worked diamond), 3 percent (mainly gold and silver), 5 percent, 12 percent, 18 percent, and 28 percent. Earlier, 200 categories goods were under the 28 percent slab, now it has been reduced to 39 items, including motor cars, ACs, large TVs, and others.
On Tuesday, Prime Minister Modi, addressing the Republic Summit indicated the government’s plan to improve the taxation system and build “a new India”. When asked about this, Rajiv said, “The average rate will gravitate towards 15 percent with increased resources and widening of the tax base”. He also mentioned that eventually, the 28 percent slab will include only de-merit items, such as large cars and tobacco.
The talks on rate-cut of tax are taking place when there is a fear of less than expected revenue collection. The per month revenue collection by GST is expected to be ₹1-1.10 lakh crores. The shortage of collection in the current fiscal year, the first year of the new tax regime, is estimated to be somewhere in between ₹30,000 crores and ₹40,000 crores.
A deficit in the revenue collection this fiscal year is not a piece of good news as there is an anticipated fiscal deficit this financial year.