GST rate rationalisation gets tricky for NDA 3.0
A reduced mandate in the Lok Sabha elections may potentially tie the BJP led government's hand in implementing GST rate rationalisation, analysts said. According to them this would adversely impact the poorer sections, something the government can ill afford at this juncture. While a group of ministers (GoM) is expected to consider the possibility of rationalisation of GST into three slabs from the current four slabs, experts said that any lowering or tweaking of GST rates on semi essential items which are taxed at 12 percent or 18 percent could lead to additional tax burden on essential items, which are taxed at a lower five percent rate.
Sources close to the development told Moneycontrol, requesting anonymity, that they believe the rate rationalisation won’t happen anytime soon due to its potential negative impact on lower-income groups.
How this comes into effect is yet to be seen. The larger question for the government to mull over, especially after the election results, is if this would create dissatisfaction to rural or lower sections of the economy. This remains to be clarified in the 53rd GST council meeting.
