The government indicated on Saturday that it may reduce goods and services tax rates in the coming months as collections are expected to top the budgeted estimate by Rs 1 lakh crore.
“If revenues increase, the government will want to pass on the benefit to consumers. Higher revenues will result in a lower fiscal deficit, more investment in infrastructure and create elbow room to cut rates,” Piyush Goyal, who is officiating as finance minister, said
He said with the system stabilising, GST is helping boost growth as multiple taxes and cesses have been removed and collections this year could reach Rs 13 lakh crore, compared to the estimated mop-up of around Rs 12 lakh crore for the full financial year. “Once data from e-way bills comes, there will be some improvement and scope for some relief,” he added.
Since its launch last July, the government has lowered rates on around 320 items, a majority of which are in the top slab of 28% with a decision on reduction in levies on construction material such as cement and paints expected soon.
With collections showing signs of improvement, there is expectation of a fresh round of cuts before next year’s general elections.
Demand a bill on every buy: Piyush Goyal
Earlier, Arun Jaitley had talked about the possibility of a further rate reduction if tax collections remain buoyant. Recently, chief economic adviser Arvind Subramanian also talked about removing the 28% slab while simplifying the compensation cesses on luxury and sin goods such as cars, tobacco and soft drinks by making them uniform.
As GST completes a year on Sunday, Goyal also urged consumers to demand a bill on every purchase, a move that will help reduce leakage of revenue and bolster collections. The minister said the government will soon launch a helpline where consumers can lodge a complaint against retailers who are unwilling to issue a bill or those who demand cash payment. Tax collections have shown initial signs of a pick-up and officials expect the introduction of electronic way bills to give a further boost by plugging leakages as consignments will be tracked from the factory gate to retail outlets.
While the government had hoped that GST, which tracks transactions at every level from the supplier of raw material to the retailer, would end the system of “kachcha bills”, several stores across the country are insisting on cash payments to avoid issuing a bill and under-report their income. “Consumers should demand a bill… this will help reduce rates,” Goyal said .
Although traders and small businesses have complained about the new regime being complex, Goyal said the IT system has stabilised after the initial glitches and the government will help any SME which approaches it for assistance. He also said more steps towards simplification of the process will be taken. “Simplicity, honesty, transparency, lower rates as more and more of the system gets into the formal economy. That’s the way we believe that GST will kick-start economic growth progress and prosperity,” he said.
Source : Times of India