A way forward

Having reduced slabs and rates, the GST Council should set eyes on further reforms

- RAISINA HILL AK BHATTACHARYA

Last week's decision on revamping the goods and services tax (GST) regime was the third such exercise in the eight years since its launch in July 2017. How different was this third exercise at revamping GST? And how much more different should it have been?

First, the differences. The decisions of the GST Council on September 3 resulted from by far the biggest such exercise. Over 450 goods and services will see their GST rates change from September 22. From a taxation point of view, this is substantially more impactful than the Union government's annual Budgets during the pre-GST days.

The rate rationalisation this time will impact over 420 goods covering a vast range of sectors, including food, tobacco, agriculture, fertilisers, coal, renewable energy, textile, health, education, consumer electronics, paper, transportation, sports goods, toys, leather, wood, defence, footwear, construction, handicrafts and machinery. In addition, as many as 34 services in sectors such as transportation, job work, construction, local delivery and insurance will see their rates change.

In comparison, the first two exercises were much smaller in both range and impact. In November 2017, just four months after its launch, the GST Council changed rates for as many as 94 categories of goods. The second exercise, even smaller than the first, took place 13 months later in December 2018. Only about 17 categories of goods saw their rates change.