Govt has informally proposed GST rate rejig once a year, say FM Sitharaman

The Centre has informally proposed to the goods and services tax council that rationalisation of rates be done once in a year and not every three months, as the present system was bringing in a certain level of uncertainty for both the government and the business, Union finance minister Nirmala Sitharaman said in Kolkata on Sunday.

"In GST, when you have come to certain level or grade, periodically changing it leads to inversion problems, refund issues, and so on. So, therefore, when one item's rate of taxation is brought down, a lot of other ripple effect is created, and with that, either the refund gets affected, or businesses rightly feel they cannot plan how much they have to keep aside for taxation in a whole year," Sitharaman told a media meet.

She said at the same time, the central and state governments aren't able to assess what they'll earn through GST in the whole year.

"So, rate reduction or increase every three months, when the GST council meets, is periodically bringing in a certain level of uncertainty.

"Now we literally proposed to the GST Council, not formally, but as part of a small discussion, we have said can we consider a situation where once in a year alone we would do any rate rationalisation — reduction or increase, and everything else, and not every three months," she said.

Sitharaman also denied that the GST collections have been coming down.

"It has not come down. There was just once when it dipped," said the Union minster.

She said over the past three months, the exact amount of collection each month has crossed Rs 1 lakh crore.

In January, the collection was Rs 1.11 lakh crore.

She said the GST administrators have benefited because of data analytics, (which has helped them in) "plugging the loopholes in collection, understanding who, where, when is gaming the system, plugging the fraudulent practices".