States to remain 'net gainers' of GST rate rationalisation: Report

States will remain "net gainers" of the proposed GST rate rationalisation exercise with their GST revenues, including devolution, estimated to be over Rs 14.10 lakh crore this fiscal, according to an SBI Research report released on Tuesday.

- OUR CORRESPONDENT

NEW DELHI:

It said that, as was evidenced in the earlier exercise of GST rate rationalisation in 2018 and 2019, an immediate reduction in rates can cause a short-term dip of around 3-4 per cent in month-on-month collections (roughly Rs 5,000 crore, or an annualised Rs 60,000 crore), revenues typically rebound with sustained growth of 5-6 per cent per month.

The Centre has proposed a rationalisation of rates and slabs under the Goods and Services Tax (GST) by moving to a two-tier tax structure of 5 and 18 per cent, and a 40 per cent rate for a select few items.

Currently, GST is a four-tier structure of 5, 12, 18, and 28 per cent. Also, a compensation cess in the range of 1 to 290 per cent is levied on luxury and demerit goods.