Centre Projects ₹47,700 Crore Revenue Loss Amid GST Rate-Rationalisation
The Centre has estimated a Net Negative Revenue loss of ₹ 47,700 crore due to GST rate-rationalisation. However, it was clarified that shift from 28% to the 40% tax bracket were projected to account for an additional revenue of approximately ₹45,570 Crore. The Finance Ministry in response to whether a Group of Ministers were to be constituted by the GST Council to address the...
The Centre has estimated a Net Negative Revenue loss of ₹ 47,700 crore due to GST rate-rationalisation. However, it was clarified that shift from 28% to the 40% tax bracket were projected to account for an additional revenue of approximately ₹45,570 Crore.
The Finance Ministry in response to whether a Group of Ministers were to be constituted by the GST Council to address the issues of initial revenue losses incurred by the States due to GST 2.0, answered in negative.
In response to a question regarding concerns highlighted by the State of Kerala in Lok Sabha, lower house of the Parliament, Finance Minister Nirmala Sitharaman clarified that the revenue loss to the State on account of the rate rationalization was likely to be relatively higher. The statement added that during the 56th GST Council Meeting, the Finance Minister of Kerala highlighted that its consumption pattern involved items taxed at higher rates.
The State of Kerala estimated revenue losses of over ₹8,000 crore, with about ₹2,500 crore loss from four key sectors: automobiles, insurance, cement, and electronics arising on account of GST rate rationalisation.
To offset losses, the Government put forth that lower taxes and reduced compliances might help mitigate National Revenue impact.
The Minister of Finance clarified that these figures were not definitive since tax collection were dynamic.
Clickhere to read answerby the Minister of Finance, Smt. Nirmala Sitharaman.