Tax board weighs GST slabs rejig, revenue impact
The Central Board of Indirect Taxes & Customs (CBIC) is currently undertaking an exercise to assess the feasibility of the Goods and Services Tax (GST) slab rejig, by merging 12% and 18% rates. Revenue implications of three different scenarios – combining these two rates to a single rate of 14% or 15% or 16%– are being studied, the sources said.
The CBIC’s inputs will likely be used by a recently reconstituted group of ministers (GoM) under the GST Council, which is tasked with reviewing the GST rates structure.
The GST slabs restructuring has been pending for over three years.
In September 2021, a GoM on rate rationalisation led by the then Karnataka chief minister Basavaraj Bommai was tasked to examine the issue. However, it did not make much progress on its mandate except for recommending tax rate adjustments on various items. Now the matter is with the reconstituted GoM headed by Bihar Deputy Chief Minister Samrat Chaudhary.
“The current study is to examine if the rate is reduced on items under 18% slab to 14% or 15% or 16%, what will be revenue loss in each case, and how much revenue gain could be achieved if 12% slab is raised to 14%, 15% or 16%,” an official said.
