One Rate For One Nation, One Tax? Single GST Slab In The Works, Says Finance Minister Arun Jaitley

Union Finance Minister, Arun Jaitley, has stated that discussions are underway to introduce a single-rate GST framework that would fall between 12 and 18 per cent, reports Business Standard (BS).

The Union Minister, in a blog post on Facebook, wrote, “multiple slabs were fixed transiently in order to ensure that the tax of no commodity goes up radically. This contained the inflation impact.”

“A future road map could well be to work towards a single standard rate instead of two standard rates of 12 per cent and 18 per cent. It could be a rate at some mid-point between the two,” he added.

According to a 2015 committee appointed by the central government and headed by Dr Arvind Subramanian, revenue neutral rate (RNR) was found to be 11.6 per cent after factoring compliance of GST at 80 per cent, using the Macro approach. However, it was 18.86 per cent using the indirect tax turnover approach.

RNR is the rate of GST at which the revenue generation of both the centre and the states would neither increase or decrease when compared to pre-GST regime.

However, the Committee recommended that RNR should fall in the range between 15 percent and 15.5 per cent (Centre and states combined) with a preference for the lower end of that range.

Mr Jaitley noted that the 28 per cent slab was a dying one and that currently, only 28 items, including luxury and sin goods, auto parts, dishwashers, AC and cement remained in that slab.

Also Read: A Year On, GST Remains India’s Biggest Tax Reform