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One GST rate: Is India ready? Here’s what Revenue Secretary Tarun Bajaj thinks

Currently, there are mainly 3 GST rates - 5 per cent, 12 per cent and 18 per cent, which contribute nearly 83 per cent of total GST revenue generation. Speaking on whether the country is ready for one GST rate, the Revenue Secretary stated that he is not sure about this.

ET Now Digital

Updated Jul 5, 2022, 17:45 IST

New Delhi: The GST Council during the recently concluded 47th meeting withdrew numerous exemptions, however, a lot of them still remain, said Revenue Secretary Tarun Bajaj on Tuesday. He also shared that they will look at pruning the remaining list of exemptions and a “lot of work needs to be done on that”.

He further recommended that moving the 5 per cent, 12 per cent, and 18 per cent GST rates into two slabs first would be ideal, adding that “even that will be complex and difficult”.

“Five years is a very short period to assess a structure as complex as GST. If we can smoothen the rough edges over the next two to three years, then we should have a system that is stable,” Bajaj went on to add.

The way ahead for GST will be spreading the tax base and lower rates, Bajaj highlighted and also shared that the government will try to include ATF, natural gas under GST initially.

GST on petroleum products

He also addressed the industry's issue about petroleum products not being under GST, saying that this conversation needs to be had with states also. “Give us some time. Maybe we could begin with a couple of items like ATF or gas. But give us some time,” the Revenue Secy noted.

According to him the rising GST collections are due to several reasons including higher inflation, higher growth, better compliance, and increased formalisation. The gross GST collections rose to Rs 1.45 lakh crore in June, the second-highest monthly total and a gain of 56 per cent from a year earlier.

Meanwhile, Bajaj on Monday indicated that the government intends to continue with the top GST slab of 28 per cent for luxury and sin goods.

Of the 5, 12, 18 and 28 per cent, we would have to continue with 28 per cent because in a developing economy, in an economy with so much income disparity, there would be some luxury and sin items that would and should attract a higher rate of taxation, he said.

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