New Delhi: Finance Minister Arun Jaitley on Thursday hinted that tax rates under the goods and services tax (GST) could be rationalized to three slabs as revenues under the new tax regime stabilize.
Speaking at the Hindustan Times Leadership Summit 2017, Jaitley said the GST Council could consider merging the current slabs of 12% and 18% into one rate and also reducing the number of items that are taxed at the highest slab of 28%.
“We started the rationalization (of GST rates) ahead of schedule. Future rationalization will depend on how the revenue moves. We have thinned down 28%. Going ahead, we will rationalize it further to probably tax only luxury items at 28%,” Jaitley said.
“Do you have scope of merging 12% and 18% and come at an interim rate? You have 5%, then this ‘X’ rate after merging 12% and 18% and then the very thin slab of 28%. Eventually that will be the direction ,” Jaitley said, adding that the speed of this rationalization will depend on how revenues stabilize.
Earlier this month, the GST Council brought down the number of items that are taxed at the 28% slab to 50 from 227.
At present, GST has five tax slabs—0%, 5%, 12%, 18% and 28%. Besides these, cess is levied on some sin and luxury goods over and above the tax rate of 28%.