Reportedly ahead of the crucial meeting of the GST Council on december 18, there have been speculations regarding the increase in GST rates as well as an increase in slabs. Meanwhile the GST council meeting comes at a time when revenue collections have been lower than expected and GST compensation is pending to states. Apparently it was earlier reported that as opposed to the current GST slabs of 5%, 12%, 18%, and 28%, the rates could be increased and slabs reduced to three 8%, 18%, and 28%.
Furthermore the talk of rates being raised came as a way to make up for the fall in revenues that has even hampered giving compensation to states for loss of revenue from implementation of the indirect tax regime. Apparently states had surrendered powers to collect taxes on goods and services after local levies got subsumed into the Goods and services Tax (GST) from July 1, 2017 and they were guaranteed through legislation that they will be compensated for any revenue loss in the first five years of GST implementation.
Moreover the government may also bring certain healthcare services under the GST net, as it looks to give a leg up to revenue mobilisation that has been hit hard in the ongoing economic slowdown. Reports stated GST rates could also be hiked on mobile phones and fabric to rejig the inverted tax structure where the rate of tax on inputs purchased is more than the rate on any sale made my business. Perhaps in response to the buzz surrounding the increase in slabs, Finance minister nirmala sitharaman had said "The buzz is everywhere other than my office. I don't know where this is coming from. I have not been to GST Council yet and we have not had any conversation yet. But it's good to see all this churning outside, it helps to clarify our thought processes.”
