New Delhi, 19 September (IANS). According to a latest Crisil report, rationalizing GST rates will not bring any kind of fiscal burden on the government.
The government has estimated an annual net deficit of Rs 48,000 crore in revenue due to GST reforms.
According to a report by Crisil Ratings, the total GST collection in the last financial year was Rs 10.6 lakh crore; Therefore, this deficit does not seem much.
The report has given special emphasis on the fact that there is no possibility of any major pressure on government revenue due to the reduction in tax rate.
The report said, “By FY 2024, 70 to 75 percent of GST revenue came from 18 percent slab. Only 5-6 percent from 12 percent slab and 13-15 percent came from 28 percent slab.”
There will be no major loss in revenue by reducing the tax rate of goods by 12 percent.
Meanwhile, tax rates are unchanged on several fast growing services such as mobile tariff charges.
New services such as e-commerce delivery have also been brought under the purview of GST and they have been imposed 18 percent tax and some increase in reform income due to benefits on other mass consumption goods may increase their demand and tax collection.
“The high income group may maintain a premium demand, which can promote revenue.”
In addition, GST improvement can lead to more goods and services formal, which can promote tax growth in the moderate period.
Although its effect on consumption depends on how much GST cuts have an impact on consumer prices and to what extent, but tax deduction on essential commodities can increase purchasing power, which can gradually give a widespread promotion to consumption.
Apart from this, there are other major positive aspects for consumption in this financial year, such as low inflation, reduction in borrowing costs, earlier this year’s income tax relief and better agriculture declared by the government.
-IANS
SKT/