28 per cent GST rate to continue, the merger of others a challenge
Revenue Secretary Tarun Bajaj on Monday indicated that bringing fuel under Goods & Services Tax (GST) will take more time. He also said that the 28 per cent GST rate to continue while merging other rates is a challenge.
Addressing the ASSOCHAM conference to mark five years of GST, Bajaj said he always tells his colleagues, especially the younger colleagues who are very enthusiastic about doing a particular thing while the thing may be important, navigating that is more important. “You don’t navigate well, you will never achieve the objective. I think fuel taxes subsumed into GST will wait for that navigation to happen, and it will take some time.
Further, he said that though there are voices that even within fuel, if ATF and gas can be subsumed first. “But we will see. As people realise that GST is doing good to every section involved in it, the fact that revenues will not be sacrificed, fuel constitutes a larger part of revenue generation for centre and states. There is this apprehension in the mind; we will have to wait for sometime,” he said.
Voice for including petrol and diesel under GST becomes louder whenever the retail prices go up. Article 279 A (5) of the Constitution prescribes that the GST Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel (ATF). Further, as per Section 9(2) of the CGST Act, the inclusion of these products in GST will require the recommendation of the GST Council. So far, the GST Council, in which the States are also represented, has not made any recommendation for inclusion of these goods under GST.
Regarding rate slabs, Bajaj said he accepts this point of view that there should be further simplicity in the number of slabs. As on date, there are four basic rates – 5, 12, 18, and 28 per cent along with four special rates of 0, 0.25, 1 and 3 per cent. Then there is cess up to 22 per cent on some goods falling into 28 per cent category.
“We would have to continue with 28 pr cent because in a developing economy, an economy with so much of income disparity there would be some luxury and some items which would and should attract a higher rate of taxation. But whether 5, 12 and 18 we can bring it down to 2 rates to start with and then see how the country grows and whether there is capacity to bring it to one rate or not. It is a very difficult challenge,” he said.
A Group of Ministers under the leadership of Karnataka’s Chief Minister Basavraj S Bommai’s convenorship is deliberating on issues related to GST rate rationalisation. It is expected to give out recommendations in the next three months.
As businesses are getting affected by contradictory rulings by Authority for Advance Rulings, efforts are on to set up a national tribunal. GST Council has already decided to constitute a Group of Ministers to address various concerns raised by the States about the constitution of the GST Appellate Tribunal and make recommendations for appropriate amendments to the CGST Act. “We hope to get the final recommendations of the GoM within a month and In next 6 months we should see a lot of progress on tribunal front,” Bajaj said.
Published on July 04, 2022