A GST reset

Simplify the structure to boost revenue

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Ahead of the two-day Goods and Services Tax (GST) Council meeting, starting today, representatives of several states ruled by non-National Democratic Alliance parties met last week to assess the potential changes in the indirect tax system.

Their suggestions, as reported in this newspaper and elsewhere, indicate that implementing the intended changes will not be easy. For instance, the group has suggested imposing an additional levy over the 40 per cent rate on sin and luxury goods.

They have also suggested that the additional levy be fully transferred to states.

Further, the states concerned have argued that, with 2024-25 as the base year, they should be compensated for revenue loss if growth is below 14 per cent.

There are projections of revenue loss of ₹85,000 crore to ₹2 trillion because of the proposed rationalisation of GST rates.

Prime Minister Narendra Modi had announced in his Independence Day address that the GST system would be rationalised.