Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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About 97.5% of goods are already in the 18% or lower Goods and Services Tax bracket, Finance Minister Arun Jaitley wrote in a blog post on Monday, adding that though the GST revenue targets set are ‘very stiff’, several States are already achieving those targets. Mr. Jaitley also wrote that in the future, once revenue collections rise sufficiently, the country could move to a GST system with only one standard rate, instead of the two standard rates of 12% and 18% currently. “Of the 1,216 commodities which are used, broadly 183 are taxed at zero rate, 308 at 5%, 178 at 12% and 517 at 18%.” Recently, Prime Minister Narendra Modi had said the Centre would bring 99% of items into the 18% or lower brackets. ‘Next priority cement’ Stating that only cement and auto parts are items of common use which remain in the 28% slab, Mr. Jaitley said the next priority would be to transfer cement into a lower slab. “All other building materials have already been transferred from 28% to 18% and 12%.” The sun is setting on the 28% slab, he added. “A frequently made comment has been that the revenue position has been disappointing,” Mr. Jaitley added. “The comment is based on an inadequate understanding of both the targets and the revenue increase. The targets set for States in the GST regime is unprecedentedly high. Even though GST commenced on July 1, 2017, the base year for revenue increase calculated is 2015-16.” “For each year, a 14% increase is guaranteed,” he added. “Thus, even when 18 months have not been finished since the launch of GST, on this day every State has a target of improving its revenue with three 14% increases compounded annually over the base year of 2015-16. This is close to a 50% being reached in the second year itself. It is almost an unachievable target.” Yet, he said, 6 States have already achieved it, and another 7 are within striking distance of achieving it. By the third, fourth and fifth year, the ability to raise revenues and close the gap will substantially increase, the Finance Minister said. “This increase in tax collection has to be factored keeping in mind the significant rate reduction which has taken place in the GST.”
