Merger of 12% and 18% GST rate slabs soon

New Delhi (TIP): The government will push the agenda of simplifying the Goods and Services Tax (GST) regime by rationalising tax rate and lower the number of tax slabs in the upcoming meeting in mid-March, sources told ET Now. The Centre is likely to push the states to look at merging 12 per cent and 18 per cent tax slabs into a standard rate. “The next GST Council meeting will take place in March. We will discuss with the council members and try to take up the issue of slab merger and correction of inverted duty structure in the meeting,” said a senior central board of indirect taxes and customs official.The opposition has criticised the Modi government for a complicated GST structure as it has four slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. Added to that the government charges a cess on demerit and luxury products above the 28 per cent GST. Recently, the 15th Finance Commission has also recommended merging 12 per cent and 18 per cent tax rates. The 15th Finance Commission chaired by N K Singh has also suggested rationalization of GST into a three-rate structure, comprising a 5 per cent merit rate and 28-30 per cent de-merit rate. According to the latest Finance Commission, the effective tax rate under GST stands at 11.8 per cent according to the International Monetary Fund and 11.6 per cent according to the Reserve Bank of India. This rate is considerably lower than 14 per cent, the average revenue-neutral rate (RNR) that was required for a smooth transition from the value-added tax regime without any revenue loss.

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