Commerce and Industry Minister Piyush Goyal on Thursday said the government expects tax revenues to rise, not fall, following the rationalisation of Goods and Services Tax (GST) rates, as higher demand will offset any rate cuts.
“In fact, with the boost in demand, revenue will probably go up,” Goyal said in an exclusive interview to Network18 Group Editor-in-Chief Rahul Joshi, while downplaying concerns that the reforms could lead to revenue loss.
He added that the GST changes, which simplify the structure into fewer slabs, would have “hardly a very consequential impact” on collections while significantly benefitting consumers and businesses.
Highlighting the government’s welfare focus, Goyal also said, “Today 62-65 crore people and everyone above the age of 70 is eligible for free healthcare,” underscoring India’s social safety net and inclusive growth agenda.
Expressing optimism, Piyush Goyal said India was “poised for a very bright future” with rising consumption, economic resilience and reforms pushing growth momentum.
Earlier, Revenue secretary Arvind Shrivastava said the rationalisation of goods and services tax regime will result in a buoyancy effect and bolster GST collections after the new rates kick in from September 22.
“Rate rationalisation will result in buoyancy effect. We also expect compliance to improve due to this exercise,” Shrivastava said in post-GST Council meeting briefing on September 3.
The GST Council on September 3 approved a new rate structure with slabs of just 5 percent and 18 percent, dropping two other rates of 12 percent and 28 percent. The new changes will lead to a drop in costs of several items, including health insurance and daily essential items just breads, milk and hair oil.
Shrivastava also said that tax rates for health-related items and 33 life-saving drugs and medicines have been cut from 12 percent to nil.
Moreover, Shrivastava said the changes will lead to a revenue loss of Rs 48,000 crore. “We expect net revenue implication to be around 48,000 crore, on consumption base of 2023-24.”
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