GoM on GST rate rationalisation to discuss raising revenue neutral rate
The Group of Ministers on GST rate rationalisation is likely to discuss measures to increase the rates to ensure the revenue neutral rate which has fallen over the past four years to around 11.6 per cent is pushed up.
Sources said the panel would discuss not only reducing the rate slabs but also take steps to ensure the revenue neutral rate is brought to around 15 per cent which would ensure that the states get adequate revenue.
The panel would also consider the studies done on the impact of the rate reduction and its benefits to the end consumers.
Sources pointed out that some studies have indicated that the consumers did not benefit from the rate cuts and the companies have been the main beneficiaries.
“The GoM is exploring the possibilities of bringing down the GST rate structures from 5 per cent, 12 per cent, 18 per cent and 28 per cent to only 3 rates i.e 5 per cent, 15 per cent and 28 per cent.
“They are looking at the possibility of merging the 12 per cent and 18 per cent rate to a common rate of 15/16 per cent. The impact on cash flows is being verified,” Parag Mehta, partner, NA Shah Associates said.
He said GST rate rationalisation is a very sensitive issue as many goods and services are in the range of 5 per cent to 12 per cent.