Simplification of GST is an ongoing process and an ideal process for a long-term solution will lead to lesser slabs, Sanjeev Sanyal, Principal Economic Adviser, Union Finance Ministry, has said.

According to him, an ideal scenario is one where tax slabs are categorised into a “low 5 per cent”, a 15 per cent slab covering most goods and services, and finally another with 25 per cent. Apart from these rates, there will be a zero tax or exempted slab under GST.

“This is a tax structure that could be a possibility in the long-term. I am not saying that this will happen tomorrow. Moreover, simplification of GST is already being done,” he said on the sidelines of an interactive session organised by the Bharat Chamber of Commerce.

The current GST rate structure has four tax slabs - namely 5 per cent, 12 per cent, 18 per cent and 28 per cent. This apart there is an exempted category of goods and services which have no tax on it, and a set of luxury goods and services which entail a cess over and above the 28 per cent tax rate.

Sanyal proposed that a long-term simplification of tax structure could see this 12 and 18 per cent tax slabs being merged into a single 15 per cent rate with most goods and services coming under it.Moreover, the 28 per cent slab could be brought down to 25 per cent.

The recent GST council meeting has already seen many goods and services being brought under lower tax slabs. This tinkering of rates, according to GST council members, may also lead to shortfall in GST collections in the coming days.

On how the Centre plans to make up for an expected shortfall in GST collections, Sanyal said: “These are evolving matters and a decision will be taken as and when required.”

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