Will petrol, power, real estate come under GST? It seems likely
The GST Council may soon bring in another change in the tax rate list by including power, real estate, and petroleum products under the unified tax ambit. There's no clear timeline on when the final decision will be taken but the council has assured that the states' revenues will not be affected due to the tax change. There's a likely scenario that the petroleum products will be kept in the highest tax slab. Also, states would be free to levy addition cess to protect the existing revenue. Bihar Finance Minister Sushil Modi, who is a member of the GST Council, on Thursday said electricity, real estate, stamp duty and petroleum products should become a part of the Goods and Services Tax. He also said the GST council could merge 18 per cent and 12 per cent tax slabs and reduce the highest tax slab from 28 per cent to 25 per cent once the tax collection "stabilises".
During his address at the annual meet of FICCI, Sushil Modi said the inclusion can happen without amending the Constitution. Both states and the Centre earn 40 per cent of their revenue from petroleum products. The current GST regime has five tax slabs - 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent, plus additional cess is GST is also charged on certain products.
Differing with criticism over frequent glitches in the network leading to the extension of deadlines for returns, Sushil Modi said the GST Network was robust and the backbone of the GST regime. Tech giant Infosys has designed the GST architecture. It also handles the GST backend network. "I can say with confidence that we have hired the best company (Infosys) for this," he said, adding the GSTN had been utilised up to 30 per cent of its capacity so far.
Sushil Modi said the GST would succeed like Value Added Tax and expressed hope that states would not seek compensation from the Centre after 2-3 years. The centre has promised to compensate states for shortfall in revenue collection due to implementation of GST for five years.
In its biggest GST tax rate change, the GST Council on November 10 had slashed tax rates on over 200 items - from chewing gum, chocolates, to beauty products, and wrist watches, providing relief to consumers and businesses amid economic slowdown. As many as 178 items of daily use were moved from the higher tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all restaurants, both air- conditioned and non-AC.
Jammu and Kashmir Finance Minister Haseeb Drabu, who also spoke at FICCI meet, said GSTN failed to inform the council on preparedness in advance. He clarified that glitches are being addressed and simplified. Over 3.20 lakh returns have been filed through the GSTN in the last four months, he said, adding work was on to refund and input tax credit.
He said that the biggest gain of GST was that it represents India's first truly genuine federal legislation.Revenues may not have increased in the last couple of months, but the regime has given the states a sub-national freedom to legislate. The transition, he said, was not as glamorous as globalisation and liberalisation, but it marks a certain move towards formalisation of the economy. The states, he said, have got a wonderful deal as GST guarantees revenues at 14 per cent growth year-on-year and what we have is a virtual tax insurance policy for five years.
With PTI inputs