NEW DELHI : Finance minister Arun Jaitley said on Monday that there is scope for further rationalisation of the goods and services tax (GST) rates. However, a decision on any further cut will depend on the revenues that accrue from the indirect tax reform, which was rolled out on July 1 this year.
The GST Council, headed by the finance minister, in its last meeting at Guwahati on November 10 had decided to cut rates on around 200 items.
Explaining the rationale behind the rationalisation in rates of goods and services that have been done after the launch of the GST in July, Jaitley said the principalobjective is that the transition has to be smooth and not abrupt. “In four months we have rationalised the 28 per cent slab. Such rationalisation (will happen in future) depending on revenue buoyancy will take place,” he said.
According to Jaitley, there can’t be a single rate for GST. This is because the tax rate should depend on the nature of the product. For example, food items have to be taxed at nil while common man items have to be taxed at the lowest range of 5 per cent. “Luxury goods, sin products and products hazardous to environment and health can’t be taxed at the same rate as aam aadmi product. So, wheat, rice, sugar can’t be taxed at the rate as Mercedes car or yacht or tobacco,” he said.
In its last meeting, the Council had decided to keep only sin goods and white goods under the 28 per cent tax bracket and moved 178 items from the highest tax bracket to 18 per cent. Thirteen items were moved from 18 per cent to 12 per cent; 8 items from 12 per cent to five per cent; six items from 18 per cent to five per cent, while six items moved from five per cent to zero per cent.