The GST Council may look into the possibility of combining the two tax rates of 12% and 18% into a single slab of 14–15%, according to Sushil Modi, the chairman of the GST implementation committee.
He said,
“While the states would be able to impose cess or surcharge on sin and luxury goods, the number of items falling under the 28% category may also be reduced.”
He added that having a single tax rate in a nation like India would be impossible.
Difference between states
Sushil Modi distinguished between states that produce goods and those that consume them, claiming that manufacturing states had a smaller revenue shortfall than their consumer counterparts.
He said while speaking to reporters,
“It is surprising to see that despite being manufacturing states, states like Gujarat, Tamil Nadu, and Maharashtra experienced a smaller shortfall in GST (goods and services tax) revenue collection.”
The manufacturing states of Maharashtra and Tamil Nadu, he claimed, only experienced revenue shortfalls of 2% and 3%, respectively. Consuming states like West Bengal, Uttar Pradesh, and Bihar, on the other hand, are experiencing revenue shortages of 10%, 8%, and 30%, respectively.
The manufacturing states were initially concerned that they would lose out on important revenue because the GST is a consumption-based tax.
Mr Sushil Modi said,
“It’s because the manufacturing states have a sizable base in the services sector, and the current gap they have will soon be filled.”
RFID
When asked about the e-Way Bill system, Mr. Modi responded that the GST Council had decided that all vehicles traveling between states should have RFID tags attached, and that GPS should also be installed. The GPS will assist in integrating different databases and in identifying any tax evaders. Additionally, he made it clear that the composite dealers needed to pay tax because there have been instances of evasion.
Petroleum products
When asked if petroleum products would in fact be included in the GST, he responded that it would depend on when the revenue streams stabilized. He said,
“There is no assurance that adding petroleum products to the GST will have an effect because they are linked to international prices and no state wants to lose revenue because they can impose a cess on them.”
However, he also said,
“It won’t happen anytime soon, in my opinion. A long time could pass.”
In addition, Mr. Modi mentioned that the GST Council would reconvene on Saturday to talk about the issues the sector of micro, small, and medium-sized businesses is facing.
Chartered accountants will work closely with the government to ensure that the GST is operating efficiently, according to Sushil Goyal, vice-chairman of the ICAI’s indirect tax committee.