Chairman of GST Implementation Committee Sushil Modi on Thursday said that revenue collection might fall in the next 3-4 months due to rate cuts on a number of items totalling to ₹ 70,000 crore. The GST Council in its last meeting reduced rates of 88 items, Modi said, adding that all the states were taking compensation for the shortfall in revenue as the Centre had promised to them.
Speaking at a seminar on GST organised by the Institute of Chartered Accountants of India ICAI in Kolkata, Modi, who is also Bihar’s deputy chief minister, said that revenue collections realised during July was ₹ 96,483 crore and the target is to reach ₹ 1 trillion a month.
He said that the GST Council might consider merging the rates of 12% and 18% into a single slab of 14-15%, depending on stabilisation of revenues.
For a country like India, he said, it was not possible to have a single GST rate. “The number of items under the 28% category may also be reduced but the states would be able to impose cess or surcharge on sin and luxury goods,” he added. On bringing petroleum products under the GST, he said it would depend when revenues stabilize.
“If petroleum products are brought under GST, there is no guarantee there will be an impact since they are linked to international prices and no state will like to lose revenue as they can levy cess on them,” he said.
Modi said “I don’t think it will come soon. It may take a long time.” The GST Council would meet on Saturday to discuss the problems faced by the micro, small and medium enterprises (MSME) sector, he said.