The Goods and Services Tax (GST) Council's fitment committee, which is made up of central and state officials, is looking into the possibility of eliminating some of the rates, especially the 12 per cent slab. The committee has started over with a new rate rationalization exercise in order to achieve a revenue-neutral structure.
According to the reports, the current financial year can see a major overhaul in GST slabs. These major changes can come from cutting one of the slabs from the current GST slabs.
The fitment committee of the goods and services tax council may remove the 12 per cent and make it a 3-slab system instead of the five slabs that India currently has.
The four slabs of the Goods and Services Tax (GST) are 5 per cent, 12 per cent, 18 per cent, and 28 per cent. The GST replaced several state and central taxes. In addition to the four main slabs, there is a top-up compensation cess on some goods, like cars, and 1.5 per cent and 3 per cent taxes on jewelry and cut diamonds, respectively, as well as precious metals.
GST Slab Structure
Nil GST
Essential products such as milk, eggs, curd, lassi, kajal, children's coloring and drawing books, unpackaged foodgrains, unpackaged paneer, gur (jaggery), unbranded natural honey, fresh vegetables, salt, unbranded atta (flour), unbranded maida (refined wheat flour), chickpea flour, prasad (offerings made to deities), and broom are all included in the 0 per cent tax slab.
5 Per cent GST
The products found in the 5 per cent slab include sugar, tea, packed cottage cheese, edible oils, raisins, domestic LPG, PDS kerosene, skimmed milk powder, footwear under Rs500, baby food, clothing under Rs1000, spices, coal, mithai (Indian sweets), and life-saving drugs.
12 Per cent GST
Items such as butter, ghee (clarified butter), computers, smartphones, packaged food, fruit juice, vegetable or fruit preparations, packed coconut water, and umbrellas are included in the 12 per cent slab.
18 Per cent GST
As we move up to the 18 per cent slab, we see items like printers, soups, ice cream, pasta, hair oil, capital goods, toothpaste, and industrial intermediaries.
28 Per cent GST
Products falling under the 28 per cent tax slab also include high-end motorcycles with a 15 per cent cess on top of the base rate of 28 per cent, small cars with an additional 1 per cent or 3 per cent cess based on engine capacity, and tobacco and cigarette products with varying cess rates.
The lowest rate of GST applied to essential items is 5 per cent, while the highest rate of GST is applied to sin and luxury goods (28 per cent).
The 28 per cent slab contributes 16 per cent of the total amount to the revenue.
Although there are fewer items in the 18 per cent slab, it accounts for 65 per cent of total revenue. 10 per cent and 8 per cent of the revenue is contributed by the slabs of 5 per cent and 12 per cent respectively.
