The Goods and Services Tax (GST) Implementation Committee’s Chairman Sushil Modi has said that the recent reduction in indirect tax rates on several items may lead to revenue shortfall in the next three-four months. Thought, he also said that in the long-run revenue collections will increase due to improvement in tax compliance.
Modi said the way GST is being implemented successfully, no States would require to be paid any compensation after three years. He added that the revenue shortfall of manufacturing States was lower than the consuming ones despite GST being a destination-based tax. He also noted that small manufacturers, traders and service providers have been facing difficulty due to the new system.
Expressing hope of being able to achieve the monthly revenue target of Rs 1 lakh crore in the ‘not so distant future’, the Chairman said the GST Council could think of bringing the petroleum products under GST once the target is achieved. However, he added that there was ‘no guarantee’ that the prices of petroleum products would come down if these items were brought under the GST.
The GST Council had recently lowered rates on over 80-odd items, including footwear, refrigerator, washing machine and small screen TV; and had also rationalised rates on some services. In all, the rates on close to 450-odd items have been brought down in the last few months.
