Letter to BS: State governments to face revenue loss after GST rate cuts

GST Council has always been flexible and accommodating

This refers to “Welcome reform” (December 26). The central government and GST Council’s decision to reduce prices on 23 items is indeed welcome. Since the launch of GST, they have reduced taxes on as many as 360 items which proves that they are open to change.

Yet, it is puzzling that cement still remains within the 28 per cent bracket. It seems that it will be tough for the government to bring it down further. The finance minister’s statement that he is aiming to merge 12 and 18 per cent slabs in GST structure is also encouraging and it will be a huge achievement considering that the tax regime is only a year-and-a-half old. In this regard, the has always been flexible and accommodating.

It will be keenly watched during the Council’s January meeting whether it undertakes a rate cut on under-construction houses and most importantly whether fuel would also be included in GST. Last but not the least, the central government will have to be ready to open their purse strings for state governments which will face revenue loss after the recent cuts and since from now on, three more state governments will have Opposition representatives, more pragmatic and flexible approach from the finance minister and the council will be key.


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