A dip in revenues notwithstanding, the GST Council may decide to cut rates on more items this week to keep the consumption story going which typically slows in an election year despite a rise in government spending.
The 30th meeting of the GST Council will be held on Friday, September 28. Finance Minister Arun Jaitley, who will chair the meeting through video-conferencing, is expected to announce a further pruning of the peak 28% rate structure. Jaitley has promised to remove all items from that, barring a few super luxury and sin goods.
Goods expected to see their way out of the 28% tax bracket include cement, certain automobile parts, digital cameras and certain categories of television sets, sources close to the development told DH. These may be placed under 18% or 12% slabs.
Cement is the only item of construction which remains under the 28% slab. Its removal from the highest bracket makes sense as construction activity, which slows during monsoon, is expected to pick up from next month.
After all, Jaitley believes GST has given a lot of purchasing power to consumers.
“There is no better opportunity for consumers to make purchases than in the environment which the GST has created. It is an opportunity to celebrate the biggest tax reform since Independence,” the minister said recently.
In the last last 14 months since GST was implemented, the council has slashed rates on 191 items from the 28% category. Originally, it consisted of 226 goods.
Apart from cement and automobile parts, tyres, automobile equipment, motor vehicles, yachts, aircraft, aerated drinks, betting and demerit items like tobacco, cigarette and pan masala remain in the 28% slab.
Even though the Centre has suffered a loss of about Rs 70,000 crore on account of reduction in tax on goods and services, the move has reduced the cost to consumers, increased purchasing capacity and added to the economy, Jaitley said.
The budgetary estimates of GST collections were more than Rs 1 lakh crore per month but the revenues have not met the target barring in April when collections topped Rs 1 lakh crore. However, the finance minister expects that the forthcoming festive season will give a boost to GST revenues.