NEW DELHI: A little over two months after the launch of goods and services tax (GST), the Centre has reiterated its plan to shift to a single rate of 18 per cent, or a dual slab of 12 per cent and 18 per cent in the future, while advising states against seeking too many exemptions and periodic reduction in rates for products and services as it would impact the long-term objective.
At the meeting of the GST Council in Hyderabad over the weekend, the Centre sought to refrain states from seeking repeated revision in rates for goods and services in the top slab of 28 per cent and specific guidelines were circulated to the ministers, pointing out that states were forwarding a huge number of representations without prior examination. On Saturday, the GST Council reduced the rates for around 40 items, but most were mass consumption items.
The government is also worried that manufactured products attracting zero GST will be detrimental to the `Make in India’ initiative as the imported rivals will not be subjected to countervailing duty and may turn out to be cheaper than locally made products. Further, states have been told that concessional levy , which results in finished product facing lower duty than inputs, will generate additional cost for domestic dealers and put them at a disadvantage to imports.