List of exempted items, supposed to be small, has expanded, mainly in services, say officials.
States are in favour of a substantial pruning of exemptions, particularly services, under the goods and services tax (GST) with some even backing a simpler three-slab structure. Some of the suggestions are likely to figure in the upcoming GST Council meeting on December 18. “A list of exempted items that was supposed to be small has expanded substantially, particularly on the services side,” a state government official.
A panel of state and central government officials, set up to suggest measures for revenue augmentation, has also backed rejig in the GST rate structure to shore up revenues besides a tighter administrative hand to improve compliance.
A final call on the changes to the rate structure, or bringing more items into the tax net, would rest with the GST Council, another official said, adding that the panel has discussed these issues threadbare.
Some services and goods that are consumed by the ‘affluent’ class only are in focus as the state government’s eye revenues.
“Why does olive oil or fine fabrics such as linen need to be in the 5% bracket?,” said another official, adding that some states that are not very keen on rate increases are concerned about the impact it could have on consumption slowdown. But there is a growing view within some that the 5% slab should be raised to 8-10%, the official said. GST has as many as seven rates though the bulk of goods fall in the 12-18% slab. All issues and suggestions would be put before the GST Council.
