The Goods and Services Tax (GST) Council is in the final stages of reviewing the GST structure. A levy reduction would soon happen, Union Finance Minister Nirmala Sitharaman, who chairs the indirect tax body, said on Saturday.
Speaking at the Economics Times Awards for Corporate Excellence in Mumbai, Sitharaman said that the ministerial group set up by the GST Council has done excellent work, which is in final stages now and that the minister would take one more look at the proposals and take it to the federal indirect tax body for decision making. This is expected to be taken up at the cuncil's next meeting.
“We are very close to coming to a final call on some of the very critical issues—reduction, rationalisation of rates and looking at the number of slabs and so on,” said the minister, adding that the rates at present are lower than what they were when the indirect tax reform was rolled out in 2017.
the GST rates had come down since the law was implemented in 2017, and the ongoing revision was likely to lower the levy further. "At the time when the GST was launched, the revenue-neutral rate was about 15.8%," said Sitharaman.
Revenue-neutral rate refers to a rate of GST that would result in collecting the same amount of revenue before and after the GST roll-out from the items covered by the new tax system. It would not increase the cost of a product for a consumer, while also maintaining the revenue generated by the government through the levy.
"Since the launch of GST, and till 2023, we had already brought that 15.8% to 11.4%, which means the rates have come down....So the clue that you are looking for is -- it will come down even further," Sitharaman said.
Sitharaman also asked industries to voice their opinions about investment to the government, at a time when private sector investments were concentrated in only a few sectors of the economy.
She also said it would be unwise for her to comment on the issue of foreign institutional investors selling off stakes in Indian stock markets due to elevated capitals gains tax, as the parliament's budget session had not come to an end.
Sitharaman said India was still the fastest growing economy in the world, at a sustained 6.5-7% growth in all post-Covid years, and across all sectors.
She said dumping of goods into India was a concern, at a time when tariffs were being used aggressively. But, there cannot be a complete stoppage of imports, as these imports are cheaper for small manufacturers, Sitharaman said. The action taken against dumping of cheap goods should be after considering the inputs from all stakeholders, including small businesses, she said.
The union commerce ministry is currently engaged in reviewing multiple trade agreements and that were signed in the past, as these agreements allowed many foreign goods to enter Indian markets unregulated. She said these agreements were speedily concluded, and often had loose language.
"The commerce ministry is engaged in reviewing many of the FTAs signed, whether it is with Japan, whether it is with Korea, whether it is with ASEAN," said Sitharaman.
Current negotiations over free trade and bilateral agreements included the lessons learnt from previous such agreements, she said, adding that putting India's interest first was a priority in such negotiations.
(By arrangement with livemint.com)
