Just two days after modifying the GST rates of nearly 200 items, Finance Minister Arun Jaitley acknowledged that there is scope for more fine-tuning of the new taxes’ rate structure. Revenue buoyancy will be the factor deciding the course of such rationalization.
At the same time, he has ruled out the extreme case of following a single tax rate. “Those seeking a single GST rate have no understanding of tariff structure,” the Finance Minister has hinted at the Congress demand for the single 18% rate.
At present, the GST rate structure has four rates besides the few low rates on gold and other items. Tax experts and administrators warns about the risk of going with too many rates. This will complicate administration and add to calculation and documentation efforts as large number of input tax credits are provided under GST.
The government is expected to come out with a modified tax rate structure after analysing the initial period running of the tax system. Similarly, tax revenue assessment during the inaugural year will help government to plan rate modification.