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Centre mulls higher, fewer rate slabs to simplify GST structure

A panel headed by Finance Minister Nirmala Sitharaman, will likely meet to consider the overhaul from the current four-rate system
Last Updated 12 October 2021, 03:35 IST

By Vrishti Beniwal

India may look at increasing tax on some goods and services in a step toward moving to a simpler structure with fewer rates, according to people familiar with the matter.

A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system, the people said, asking not to be identified as the discussions are private.

India currently taxes good and services produced in the country at 5 per cent, 12 per cent, 18 per cent and 28 per cent, with some essentials such as food items attracting the lowest rate and sin and luxury goods ending up with the highest levy.

The two lowest rates could be raised by a percentage point each to 6 per cent and 13 per cent, respectively, the people said. While the rates would eventually be pared to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month, they said.

A finance ministry spokesman didn’t immediately respond to a call seeking comments.

The plan to raise GST rates comes at a time when key Indian states are heading for polls early next year, possibly making it an unpopular move in a nation only just recovering from the devastation caused by the coronavirus pandemic.

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(Published 12 October 2021, 02:22 IST)

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