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03/08/2018 11:08am

GST council might merge two GST rates into single slab: Sushil Modi

image GST council might merge two GST rates into single slab: Sushil Modi

New Delhi, Aug 3 (KNN) The GST Council might consider merging the rates of 12 per cent and 18 per cent into a single slab of 14-15 per cent, depending on stabilization.

This was said by chairman of GST implementation committee Sushil Modi while speaking at a seminar on GST organized by the Institute of Chartered Accountants of India ICAI.

For a country like India, he said, it was not possible to have a single GST rate.

 “The number of items under the 28 per cent category may also be reduced but the states would be able to impose cess or surcharge on sin and luxury goods,” he added.

Talking about shortfall in revenue, Modi said that the revenue shortfall of manufacturing states like Maharashtra, Tamil Nadu, Gujarat was lower than the consuming ones despite GST being a destination-based tax.

For Maharashtra, the shortfall was 2 per cent, while for Tamil Nadu it was 3 per cent, he said.

For consuming states like West Bengal, the shortfall was 10 per cent while for Uttar Pradesh it was 8 per cent and Bihar at 30 per cent, he added.

The manufacturing states were apprehending that they would lose revenue as GST was a consumption-based tax.

“It is due to the huge base of the services sector in the manufacturing states and the shortfall they face now will be wiped out very shortly,” Modi, who is also Bihar’s deputy chief minister, said.

He said the priority of the GST Council for 2018 was to simplify GST returns.

On bringing petroleum products under the GST, he said it would depend when revenues stabilizes.

He said, “If petroleum products are brought under GST, there is no guarantee there will be an impact since they are linked to international prices and no state will like to lose revenue as they can levy cess on them,” he said.

In this regard, Modi said, “I do not think it will come soon. It may take a long time.”

Regarding e-way bill, he said that the council had taken a decision to attach RFID (radio frequency identification) tags on all vehicles travelling between states and also install GPS, which would help in integrating various databases and detect whether anyone was evading tax.

He also urged the composite dealers to pay taxes as evasion was taking place.

The GST implementation committee chairman said that revenue collection might fall in the next 3-4 months due to rate cuts on a number of items totaling to Rs 70,000 crore.

The GST Council in its last meeting reduced rates of 450 items, Modi said, adding that all the states were taking compensation for the shortfall in revenue as the Centre had promised to them.

The GST Council would meet on Saturday to discuss the problems faced by the micro, small and medium enterprises (MSME) sector, he said.

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