General consumers may get a bonanza from the government by end of the year or before the general elections that are scheduled to be held in 2019. Actually, the government is planning to rationalise the existing GST tax slabs and reduce the number of tax slabs by merging the slabs of 12 percent and 18 percent to create 15 percent slab. The decision can be done by end of the year or before elections.
Sources aware of the development has informed Zee Business that the finance ministry is in favour of merging the two slabs of 12 percent and 18 percent. The two slabs will be merged to bring a new GST tax slab of 14-15 percent. With this merger, the five slab structure will decrease into a four slab structure of 0 percent, 5 percent, 14-15 percent and 28 percent. Presently, there are five GST slabs of 0, 5, 12, 18 and 28 percent.
The government is likely to submit its proposal to the GST Council asking it to reduce the tax slabs by end of the year. The proposal will be submitted after revenue through GST collections goes up of reaches a balanced mark.
The government is waiting to end the initial effects on the collection that it felt due to the expulsion of several products from the 28 percent tax slab. Earlier on July 21, 2018, the GST Council approved GST rate cuts on 88 consumer-centric items such as cosmetics, refrigerators, washing machines, small screen televisions and sanitary napkins among others.
At present, about 640 consumer-centric products fall under the GST tax slab of 18 percent and this reduction of the slab to 14-15 percent will help the consumers to be in a profit of 3-4 percent on their purchases. In addition, around 250 products fall under the 12 percent GST slab.
The government is assessing the impact of the decision that it will have on revenues. Rationalising and fixation of 15 percent slab will lower several bills from credit card, mobile phone to machinery, tiles and many others.