Chief Economic Advisor Arvind Subramanian has said that there will be fewer GST rate slabs going forward and petroleum products are likely to be brought under the Goods and Services Tax. However, that part is contingent upon the cooperation of the States.
He said that this is likely to happen in the next few months and years with the consent of the states, replying to a query on when petrol and diesel would come in the ambit of GST and whether States would agree to such a move.
The Petroleum Ministry had already written a letter to the GST Council regarding the imposition of GST for petrol and diesel, something that may not be to the State governments liking since the VAT they levy on the fuel is a major revenue earner. Besides VAT, excise duty is the other significant levy on petrol and diesel. The states stand to lose this income if petroleum fuels are brought under GST which is expected to reduce the pump price.
Mr.Subramanian, during his lecture on ‘Economic Policy Making in the Government’ at the ICFAI Foundation for Higher Education, said that for a large and diverse nation such as India, It is difficult to have one GST rate, given that it would translate into taxing essential commodities and luxury items on the same level.
But he reiterated that the country is moving on the path to having fewer rates. he said the Govt is considering to merge the 12% and 18% rate slabs into a single rate. This is in addition to pruning the list of goods in 28% GST slab so that on luxury consumption goods remain in that bracket.
He hoped that as states began to get comfortable with the GST regime and revenues improve due to the widening of the tax net, the case for further simplifications will get easier leading to a streamlined GST.
Among other things, he clarified that there is no decision yet on the proposal to change the financial year from April-March to January-December. With regard to the growing popularity of various crypto currency, the CEA said that issuing currency is only the function of the sovereign Govt and that officially Bitcoins are banned.