GST’s 12, 18 Per Cent Slabs May Be Merged In Future As Revenue Increases To Make It A Two Tier Tax: Arun Jaitley

Former Finance Minister Arun Jaitley on Monday (1 July) has said that the 12 and 18 per cent tax slabs in the goods and services tax (GST) may be merged in future as revenue increases, thus converting it into a two-tier tax system, reports Press Trust of India.

In a Facebook post on the second anniversary of the GST rollout, he said that 20 states have already showed over 14 per cent increase in revenue, and do not require compensation from the centre for revenue loss due to GST implementation.

Jaitley said that most consumer items fall under three slabs - 18 per cent, 12 per cent and 5 per cent.

“Except on luxury and sin goods, the 28 per cent slab has almost been phased out. Zero and 5 per cent slabs will always remain. As revenue increases further, it will give an opportunity to policy makers to possibly merge the 12 per cent and 18 or cent slab into one rate, thus, effectively making the GST a two rate tax,” he said.

Jaitley said that a single slab GST is possible in affluent countries, and hence it would be inequitable to apply a single rate in the nations with large chuck of people below the poverty line. In another Facebook post he said:

GST was was rolled out on 1 July 2017 after absorbing 17 local taxes. Currently, the GST has four slabs- five per cent, 12 per cent, 18 per cent and 28 per cent. On top of the 28 per cent slab, a cess is imposed on automobiles, luxury, demerit and sin goods.