Amalgamation of GST rates: Benefits and Consequences?10 M

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 Rationalization of GST Rates of Goods and Services:


The GST rates on goods and services were fitted into 5 slabs i.e. Nil, 5%, 12%, 18% and 28%, largely based on the pre- GST cumulative indirect tax incidence both of Central and State taxes, including the embedded taxes, which are subsumed in GST, so as to ensure revenue neutrality.

The changes in the GST rate structure and policy have been recommended by the GST Council keeping in view the representations received from trade and industry and the interests of consumers and the same are expected to benefit the overall economy and consumers.

A plan to merge goods and services tax (GST) slabs of 12% and 18% into a single rate.

Amalgamation of GST rates: Benefits


  1.  Easing of procedural complications and less litigation, leading to greater revenue collection.
  2. A revenue-neutral exercise; meaning, it wouldn’t lead to any changes in the actual tax revenue for states and the Centre. 
  3. tax on items in 18% slab will come down in an upside for consumers. ExampleIf the Council approves a single rate, items such as ghee, butter, cheese and spectacles may become expensive, while soap, kitchenware and apparel may become cheaper. 
  4.  lower rate of taxes, increased tax base, higher collections, ease of trade and least interface in assessments with a significant part of the tax rationalisation over, the growth percentage in the years to come will increase.

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