Higher GST Rates on Cards to Simplify Structure

Higher GST Rates on Cards to Simplify Structure

A meeting on goods and services tax headed by Finance Minister Nirmala Sitharaman, will likely take place in December to consider the overhaul from the current four-rate GST system, the people said, asking not to be identified as the discussions are private.

According to people familiar with the matter, India may look at increasing tax on some goods and services in a step toward moving to a simpler structure with fewer rates.

Currently in India four GST rates are prevailing at 5%, 12%, 18% and 28%, with some essentials such as food items attracting the lowest rate and sin and luxury goods ending up with the highest levy.

However, it is expected that the two lowest rates could be raised by a percentage point each to 6% and 13%, respectively, the people said. While the rates would eventually be pared to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month, they said.

The plan to raise GST rates comes at a time when key Indian states are heading for polls early next year, possibly making it an unpopular move in a nation only just recovering from the devastation caused by the coronavirus pandemic.

A finance ministry spokesman didn’t immediately respond to a call seeking comments.

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