GST slab rate of 5% may increase to 6% in a few months or the next financial year. Low GST revenue collection led to delay of GST compensation to states and inadequate cess collection. This raises serious question of hastily implementation of GST without planning in 2017.
Government set to form a panel to discuss plans to elevate GST revenue collection. Decision to increase the GST slab rate will further increase inflation.
The 5% GST Slab Rate
Household provisions including edible oil, sugar, spices, tea, coffee and so on are under 5% GST slab rate. With the 5% rate, the center approximately accumulates Rs 1.18 lakh crore in the form of GST collected revenue. It also estimated that about 5% slab tax nearly interprets for 5% of GST collection. Increasing this slab by 1% That apart this slab comprises of basic clothing, footwear, certain drugs, sweets and coal.
Increase in GST Rate
The main agenda to change slab rate is to revamp revenue collection and meet Rs 1 trillion collection target per month. Further, the increase in GST slab rate may bring over Rs 1000 crore additionally each month. However, this may not seem much in the value terms.
As of now, the cess rate for a cigarette is 5% plus Rs 2,076 per 1,000 roll-ups till 65mm and over 5% plus Rs 3,668 for 1,000 sticks up to 75mm. This would drastically change following GST structure alignments. However, the automobiles are spared from this discussion as the sector is already facing downside.
Need to Increase the Slab Tax Percentage
As stated by the officials, to reimburse the states what they owe is the main motive of this idea. Besides that, there was a spike in GST collection in November that crossed Rs 1 lakh crore. This was assumed to be the effect of increased demand during the festive season. Nonetheless, the center aims to maintain the streak and increase the slab tax to keep the revenue high. In addition, there is speculation on increasing GST rates of cigarettes and aerated drinks.