The GST council last week slashed rates on many items and took them out of 28 per cent bracket
After reducing rates of the new national tax GST on many items, the Goods and Services Tax council may further slash rates depending on the revenue situation, Assam Finance Minister and the council's member Himanta Biswa Sarma said in Guwahati today.
Mr Sarma said discussions on the tax rates on handicrafts and handloom and possible adding of real estate in the new indirect tax system will be taken up at the next meeting scheduled for January-end 2018.
"Pruning of rates is a continuous process, but it has to be seen in terms of revenue buoyancy. As and when a higher revenue growth or buoyancy is established, there is a scope for pruning of rates," he said while inaugurating a plant of fast-moving consumer goods firm Emami at Pacharia, 25 kilometres from state capital Guwahati.
"It is not that all the items from 28 per cent bracket can come down as there are many luxury goods in the bracket, and from there the government gets revenue. But pruning is still possible," he added.
Citing the example of paints and cement which were kept in the higher tax bracket, he said these are common items, but alternatively these are sources of revenue for the government.
"If for cement, the rate is cut by 10 per cent, the revenue involvement would be more than Rs 5,000 crore. There is a question whether the government will take that kind of risk or not," Mr Sarma said.
On whether the government would reduce the number of tax slabs in the GST, Mr Sarma said: "We do not see any reason why it should come down. Hundreds of taxes were handled just five months before... now four-rate structure (in GST) is a big thing in itself. In our agenda, we were never worried about the structure. The structure was not an issue," he said.
On inclusion of real estate in the GST, he said a paper was tabled at the recent meeting in Guwahati. "But it could not be taken up for discussion," he said, adding that issues such as architecture, surrender of stamp duty, multiplicity of taxes (across states) have to be discussed before it is brought under the GST.
"So, if it is brought under GST then there cannot be multiple taxes (stamp duty). Now, whether the states will be ready to surrender stamp duty or whether stamp duty will be taken as nature of goods, this architecture has to be developed," Mr Sarma said.