GST rates rationalisation possible by clubbing 12 per cent, 18 per cent slabs in future: Arun Jaitley

Finance minister Arun Jaitley on Wednesday said there is scope to rationalize goods and services tax (GST) by clubbing up the 12 per cent and 18 per cent slabs into one category as the country’s most comprehensive indirect tax reforms progresses. 

“I do concede that as it (GST) moves forward, there will be scope for rationalising the rates. There, probably, will be scope that the two standard rates of 12% and 18 per cent, after some time, could be clubbed into one. That is a That is a fair possibility and a suggestion,” Jaitley said replying to debate on the two bills related to GST in J&K. The current GST has 5 per cent, 12 per cent, 18 per cent and 28 per cent rates, plus one for luxury and sin goods. There are some that are zero rated, or nil rate. 

Jaitley said if the two rates had been merged into one its inflationary effect would have been high. “Therefore, we did not get into this exercise,” he said responding to criticism over several slabs in the GST rates. Jaitley said there can’t be a single slab in a country like India which has a large population below poverty line (BPL). As an example, he said a hawai chappal and a BMW car could not be taxed at the same rate.