GST Council may consider revamping tax structure

In wake of growing revenue concerns, the Goods and Services Tax (GST) council may consider revamping tax structure and raising the existing 5 per cent rate to 6 per cent to shore up the shortfall in collections.

The slab restructuring may help government garner additional revenues of Rs 1,000 crore per month.

As of now, the GST has four slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. The 5 per cent slab includes essential commodities such as food items, footwear and basic clothing.

According to the government data, the 5 per cent slab contributes to nearly 5 per cent of GST collection. The government's monthly GST collection target is about Rs 1.18 lakh crore.

The GST panel, chaired by the union finance minister and comprising finance ministers of states, will meet on December 18 to examine various measures to boost revenue collection, including review of the tax structure, compensation cess rates and exempted items.

"An idea that has emerged is increasing the 5 per cent slab to 6 per cent, which will mean 3 per cent GST each for the Centre and states. Some states are arguing that this will mean a 20 per cent increase in the tax rate. But in value terms, it will not be much," a government official told.