DNA Money Edit: GST rejig a new challenge for the Centre

Close on the heels of bringing several products under the slab of 18% and below in the Goods and Services Tax (GST) regime, the government is now open to the idea of merging the existing standard rates of 12% and 18%, and ushering in an average slab of around 15%. Nearly 18 months after GST was born, India is now ready to dream big and make itself a 'one-nation, one-tax' country. The finance minister's proposal for a single rate in future has definitely cheered up the market.

The fact is that even if India merges the two slabs and strikes a mid-way, the GST rate here will continue to be one of the highest in the world. The Vijay Kelkar-led 13th Finance Commission had proposed a single rate of 12%.

Soon after GST was launched on July 1, 2007, wide range of slabs and cumbersome tax-filing procedures had created insurmountable confusion in the initial phase. The government's estimate of average monthly GST collection of Rs 1.12 lakh crore in the Budget has turned out to be overambitious. Given the average monthly shortfall of Rs 15,000 crore, the annual shortfall may be around Rs 1.80 lakh crore, according to tax experts. Since further slashing of GST rates will hurt the tax kitty, the government will have a herculean task ahead of expanding the tax net and beefing up the collections.