GST rate structure rationalisation on Centre’s agenda: CEA K V Subramanian

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Rationalisation of GST rate structure is on the government’s agenda and it is definitely going to happen, Chief Economic Adviser (CEA) K V Subramanian said on Thursday. Further, he said that a three-rate structure is very important and there is also a need to fix inverted duty structure as far as the GST is concerned.

The Goods and Services Tax (GST), which amalgamates more than a dozen central and state levies like excise duty, service tax and VAT, was introduced in July 2017. GST currently has five rate structures — 0.25%, 5%, 12%, 18% and 28%.

“I think that’s something definitely going to happen. The original plan was to have a three-rate structure. But I think what we have to be very cognizant about is that oftentimes with policymaking you don’t want perfect to actually become the enemy of the excellent,” Subramanian said.

“The GST, the way it got created with actually five rates was basically excellent because now we are seeing the impact on GST’s amounts that are coming in…the policymakers then must be given credit for actually being practical enough to say, let’s get it going first,” he said at a virtual event organised by industry body Assocham.  “The three-rate structure is something… definitely important and even the inverted duty structure (is) also equally important to actually fix. I think the government is definitely seized of the matter. So we should hopefully see traction on that soon,” he said.