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Fewer GST slabs possible, says FM

Hints at relief for small taxpayers, seeks compliance

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Union Minister of Finance and Corporate Affairs Arun Jaitley at the National Academy of Customs, Indirect Taxes and Narcotics (NACIN) on Sunday
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Union Finance Minister Arun Jaitley on Sunday hinted that the number of slabs under the Goods and Services Tax (GST) can be reduced once there is revenue buoyancy. He also said that people who demand development of the nation need to pay their taxes honestly, in remarks that come amid a debate over the state of India's economy.

"We are in the first 2-3 months [of GST implementation]. We have almost by the day, space and scope for improvement to reduce compliance burden as far as small taxpayers are concerned," he said at an event in Faridabad.

Since July 1, GST has replaced around a dozen central and state taxes to be a single national tax. At present, there are four tax slabs of 5, 12, 18 and 28 per cent, plus a levy of cesses on luxury items like cars, aerated drinks and tobacco products to compensate states for any revenue losses in the first five years.

"In a society which did not conventionally mind being a non-tax complaint one, people are realising the virtues of compliance which comes with passage of time. We have space for improvement, eventually once we become revenue neutral, to think in terms of bigger reforms such as lesser slabs, but for that we have to become revenue neutral...," he said.

The slab reduction, as and when it happens, will address a major concern. GST is meant to unify India's economy as "one nation one tax", and make it easier for companies to do business, but there have been complaints that too many slabs have made transactions complicated. However, an overwhelming 81 per cent of items under the GST regime attract tax of 18 per cent or below and only about 19 per cent of items are taxed at the highest rate of 28 per cent.

Jaitley was addressing officers of the Indian Revenue Services (IRS) at the foundation day event of the National Academy of Customs, Indirect Taxes and Narcotics (NACIN).

He said that "revenue is the lifeline of governance", and would help in taking India from being a developing to a developed economy. He said that tax officers need to be firm and fair to ensure that those liable to pay are complying, and those not falling within the bracket are not unnecessarily burdened.

He emphasised that indirect tax burden is borne by all sections of the society, and said it is always the endeavour of the government to bring down tax rates on mass consumption commodities.

"Direct tax is paid by more by the more affluent, somewhat by the others and certainly not by the weaker section but the impact of indirect tax places burden on all. Therefore, an effort is always as part of the fiscal policy ... to ensure that the commodities which are consumed more by the common people are least taxed compared to others," he said.

(With agency inputs)

Current tax slabs under gst

There are four tax slabs of 5, 12, 18 and 28%, plus cesses on luxury items to compensate states for any revenue losses
An overwhelming 81% of items under the GST regime attract tax of 18% or below and only about 19% of items are taxed at the highest rate of 28% 
Slab reduction, as and when it happens, will address a concern that too many slabs have made transactions complicated

 

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