5% GST Slab Will Go Away
This is the news for all including businessmen and consumers, that the GST council may decide to remove the 5 per cent GST slab.
With an intent to raise revenue, all the states have come on board to reduce their dependence on the Centre, and the Goods and Services Tax Council council has arranged a meeting next month. In the meeting, the council may take up a proposal to remove the 5 per cent GST slab and move to 3 per cent and 8 per cent slabs as per the news agency PTI.
Current Slabs
Currently, our GST has four types of slabs under which every product falls 5, 12, 18 and 28. However Gold and its jewellery attract a 3 per cent tax. But there are some unbranded and not much-known food items that are not levied.
As per the sources, “In order to augment revenue, the Council may decide to prune the list of exempt items by moving some of the non-food items to 3 per cent slab.”
The discussion can also head towards converting the 5 per cent slab into either 7 or 8 or 9. However, the final decision will be taken by the Goods and Services Tax Council itself which includes, Finance Ministry.
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How Does State Revenue Generation Relates To GST Slabs?
With calculations it is known that every 1 per cent increase in the 5 per cent GST slab will result in the additional revenue worth ₹50,000 Cr P.A. however there are more ideas under consideration, for example, the council may approve increasing the slab to 8 per cent.
Essential and luxury items are treated differently under GST calculations. Essential items are either exempted or taxed under the minimum tax slab. On the other hand luxury items are taxed at the highest rates, on top of the 28 per cent slab luxury items also attract cess charges. The idea of cess collection is implemented to compensate for the revenue loss of states when GST was rolled out.
When the GST was implemented on July 1, 2017, the central government planned to compensate & protect the state revenues for five years till 2022.
