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The list of items that are exempted from Goods and Services Tax (GST) is likely to be cut down. Tarun Bajaj, revenue secretary, said the matters related to cutting short the list of tax-exempted items and fixing the irregularity of certain raw materials facing higher tax rates as compared to finished goods will be discussed in the next meeting of the GST Council. These issues will be pursued by the council by keeping in mind the general principle of tax stability.

The meeting of the GST Council is anticipated to take place in the next few weeks, but a date is yet to be fixed. As per Bajaj, the Centre’s policy is to provide a tax regime that is stable as well as predictable.

Bajaj was addressing the virtual meeting of the Confederation of Indian Industry (CII) that pondered on Atmanirbhar Bharat or self-reliant India. He said that the existing tax rate on four-wheelers which also attracts a GST cess meant for financing states will remain in place for a few more years.

Citing a study by the Reserve Bank of India, Bajaj said that the revenue-neutral rate of GST stood at 15.6%, but the current rate is 11.4 or 11.5%. He said that the rates have been slashed at the macro level, but in a few sectors, it has shot up. Solutions have to be formulated to bring down rates that are very high, certain items from the exempted list have to be removed and the inverted duty structure has to be corrected, added Bajaj.

List of exempted items to be revised

The comments made by Bajaj are indicative of the fact that for tax rates on certain items to come down, the list of exempted items has to be reduced. In addition to this, the problems arising due to anomalies like making tax refunds in cases where raw materials are taxed higher than the final product need to be fixed. Discussions on these topics have taken place during GST Council meetings held earlier, but nothing has been implemented yet.