Govt. Eyes Single 18% GST Rate Or Dual Slab Of 12% & 18%

It’s been two months only after the launch of goods and services tax (GST). The Centre has reiterated its plan to shift to a single rate of 18 per cent, or a dual slab of 12 per cent and 18 per cent in the future, while advising states against seeking too many exemptions and periodic reduction in rates for products and services as it would impact the long-term objective.

At the 21st meeting of GST Council in Hyderabad last weekend, the Centre sought to refrain states from seeking repeated revision in rates for goods and services in the top slab of 28 per cent and specific guidelines were circulated to the ministers, pointing out that states were forwarding a huge number of representations without prior examination. On Saturday, the GST Council reduced the rates for around 40 items, but most were mass consumption items.

The government had finalised a four-slab GST structure, including two standard rates of 12 per cent and 18 per cent, as it sought to shield households from a possible jump in prices even as it has faced criticism from economists for what they said was not a “perfect model”. The recent GST numbers have raised expectations of a rate cut in the future if the buoyancy is maintained but the government has said that it is too early to reach any conclusion.

It has been suggested that goods or services of local importance should be helped through subsidy instead of seeking an exemption or reduction.

The government is also worried that manufactured products attracting zero GST will be detrimental to the `Make in India’ initiative as the imported rivals will not be subjected to countervailing duty and may turn out to be cheaper than the locally made products.

(Source: http://timesofindia.indiatimes.com)

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