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To achieve a revenue neutral structure, adjustments to GST rates could be carried out in a phased manner

To achieve a revenue neutral structure, adjustments to GST rates could be carried out in a phased manner

In September last year, the GST Council had tasked a group of ministers to look into the contentious issue of rate rationalisation. The GoM, headed by Karnataka Chief Minister Basavaraj Bommai, was also expected to examine the issue of the inverted duty structure and review the list of goods that were exempted from the tax. The rationale for setting up the committee was straightforward — to expand the tax base and boost revenues. While GST collections have improved of late — collections touched an all-time high of Rs 1.42 lakh crore in March — on the whole, they have fallen short of expectations. And considering that GST forms a substantial part of general government tax revenue, lower than expected collections have fiscal implications at both the central and state levels. For states which are unlikely to have the cushion of revenue garnered through the compensation cess after June this year, the situation will be particularly challenging in the absence of a significant pick-up in overall collections.

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