Sun setting on 28% GST slab: FM Jaitley

Finance minister Arun Jaitley said today, "India should have three broad tax slabs of zero, 5% and a standard rate, which will replace 12% and 18% Goods and Services Tax (GST) rate."

 

However, luxury goods such as luxury cars and demerit goods (aerated drinks, tobacco products, etc.), could be taxed higher.

 

“A future roadmap could well be to work towards a single standard rate instead of two standard rates of 12% and 18%. It could be a rate at some mid-point between the two. The 28% slab is now a dying slab. 

 

Our next priority will be to transfer cement into a lower slab. All other building materials have already been transferred from 28% to 18% and 12%. The sun is setting on the 28% slab,” Jaitley said in a blog post today.

 

Jaitley’s comments come following the GST Council meet on Saturday wherein the council slashed rates on a total of 23 goods and services. 

 

Currently, 1,216 goods and services fall into four broad tax brackets: 5, 12, 18 and 28 percent. Further, 183 items are taxed at 0%, 308 at 5%, 178 at 12%, and 517 at 18% and only 27 items at 28%.

 

The revenue impact of the rate rationalization exercise discussed on Saturday will be Rs5,500cr annually and Rs1,375cr for the remaining three months of the financial year 2018-19. 

 

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