Going forward, as tax revenues significantly increase, India will have GST slabs of 0 per cent, 5 per cent and a standard rate between 12-18 per cent for commonly-used items, Finance Minister Arun Jaitley said on Monday.
Luxury and sin goods will, however, continue to be taxed in a higher bracket.
In a Facebook post titled Eighteen Months of GST', Jaitley said, of the 1,216 commodities which are used, broadly 183 are taxed at zero rates, 308 at 5 per cent, 178 at 12 per cent and 517 at 18 per cent.
The 28 per cent slab is now a dying slab, he said. Currently, 28 items, including luxury and sin goods, auto parts, dishwashers, AC and cement remain in the highest slab of 28 per cent.
With the goods and services tax (GST) transformation completed, we are close to completing the first set of rates of rationalisation i.e. phasing out the 28 per cent slab except in luxury and sin goods, he said.
A future roadmap could be to work towards a single standard rate instead of two standard rates of 12 per cent and 18 per cent, he said.
It could be a rate at some mid-point between the two. Obviously, this will take some reasonable time when the tax will rise significantly. The country should eventually have a GST which will have only slabs of zero, 5 per cent and standard rate with luxury and sin goods as an exception, Jaitley said.
Stating that only cement and auto parts are items of common use which remain in 28 per cent slab, Jaitley said the next priority will be to transfer cement into a lower slab.
All other building materials have already been transferred from 28 per cent to 18 per cent and 12 per cent. The sun is setting on the 28 per cent slab, he added.
The GST Council in its last meeting on Saturday cut rates on 23 items, thereby trimming the 28 per cent slab.
Jaitley said the standard rate pre-GST rollout was 31 per cent on a large number of commodities.
The assessees had only two options either to pay a high rate of tax or evade it, he said, adding tax evasion was prevalent to a large extent. India comprised of multiple markets.
Those who oppressed India with a 31 per cent indirect tax and consistently belittled the GST must seriously introspect. Irresponsible politics and irresponsible economics is only a race to the bottom, Jaitley added.