Finance Commission Suggests GST Council To Simplify Tax Rates By Creating Just Three Slabs Instead Of Four

In a bid to further simplify tax rates, the Fifteenth Finance Commission (FFC) has suggested the Goods and Services Tax (GST) council to reduce the tax slabs from present four to three, officials having direct knowledge of the matter said on Sunday (22 December), reports Hindustan Times.

According to the report, the FFC has suggested a standard rate of 17 per cent, a lower merit rate for items of common consumption and a higher rate on luxury and sin goods, the officials said.

The GST regime, at present, has four tax slabs of 5, 12, 18 and 28 per cent.

Earlier, Finance Minister Nirmala Sitharaman had reportedly put forth a similar view on 7 December.

“Eventually, we will of course have to rationalise [the rates]. Do we want so many slabs? Do we want to have just two or three slabs? Original intent was that we have just the three —merit, sin and the standard; just the three rates,” Sitharaman was quoted in the report as saying.

As per the report, some of the policymakers representing the Centre and the states have shown interest in rationalising the tax structure into three slabs to simplify the system and boost the collection of revenue.