New Delhi: The Goods and Services Tax Council may consider lowering tax rates on goods such as handmade furniture, plastic products and daily-use items like shampoo, and simplify return filing rules at its next meeting later this week.
Finance Minister Arun Jaitley today noted that while fixing the Goods and Services Tax slabs initially, the Council had been guided by the principles of equivalence and revenue neutrality but had later lowered the rates on many items over its last few meetings.
"In the old regime, the central excise was embedded in the cost, so people didn`t realise and with the cascading effect of excise, VAT, the taxes added up to 31 percent. Keeping with the equivalence principle, that is how the 28 per cent GST slab was born," Jaitley said.
"The GST Council in the last 3-4 meetings has slashed rates on over 100 items, thereby bringing them down either from 28 percent to 18 per cent, or from 18 per cent to 12 percent," he said.
"We have been gradually bringing them down. The whole idea is as your revenue collections neutralise, we must prune it and that`s the pattern in which the Council has so far been functioning. I see that as a future guide as far as the Council is concerned," he added.
The Council, headed by Finance Minister Arun Jaitley, will meet on November 10 to consider lowering the 28% rate on certain common-use items.
In further relief to small and medium enterprises, the panel is likely to rationalise the tax rate in sectors where the total incidence of taxation has gone up because the goods were earlier either exempt from excise or attracted lower VAT rates in the previous indirect tax regime.
The Council has been meeting every month since the GST regime, which amalgamated over a dozen central and state taxes, was introduced on July 1. The meetings have resulted in many changes to ease compliance burden on businesses as well as provided relief to consumers.