GST rate rationalisation will result in tax buoyancy, bolster revenue: Revenue secretary

Revenue secretary Arvind Shrivastava said the changes will lead to a revenue loss of Rs 48,000 crore

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.”

On the question of whether India Inc will pass on the benefits to consumers, the secretary said the government hopes that the reduced prices will be passed on eventually.

“Industry has largely passed down the benefit of rate cuts even before. We expect the industry will pass down the benefits this time too eventually,” he said.