Govt Backs Merging 2 Tax Slabs in GST; Decision in Next Meet

The Central government is favouring the merger of two tax rates in GST – 12 percent and 18 percent, said a top finance ministry official. The move is after a demand first made by some states and endorsed by the Fifteenth Finance Commission (FFC).

GST Council may discuss the matter at its meeting in March, the official added.

“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, as reported by TimesNow.

Recently the FFC has also recommended merging 12 percent and 18 percent tax rates. FFC Commission chaired by NK Sigh also suggested rationalization of GST into a three-rate structure, comprising a five percent merit rate and 28-30 percent de-merit rates.

The senior official said, “We realize that our GST rates are lower than the revenue-neutral rate. The council will take a final call on what the rationalized slabs should be. The aim will be to make the structure clean besides improving revenues”.

In January, the GST revenue touched a record high of Rs.1.19 lakh crore due to improved economic activity and enforcement.

The government will also look to correct the inverted duty structure in certain items such as textiles, footwear, and fertilizer among others in March.