Prime Minister Narendra Modi has categorically said there won’t be any changes in GST slabs. His argument that milk and Mercedes cars can’t be taxed at the same rate is sound, specially in a developing country. But then no one had suggested a single GST rate for all goods. Both economists and politicians suggested 18 per cent as the highest rate, as 28 per cent is far too high for a country that’s already heavily taxed, both direct and indirect. If luxury cars are a specific target, along with a few uber-luxury items, special duties could be imposed, as many nations do with liquor. But so many items on the 28 per cent rate is greedy, to say the least.
Consumer segments are seeing a strong recovery and buoyant GST collections reflect that. GST is likely to have fetched at least Rs 1 lakh crores in excess of the anticipated Rs 1 lakh crore per month average collection in its first year, which means unless more common items are dropped to the next lower slab, the consumer will continue to be taxed heavily. The government appears keen to keep its current account deficit under control, and is thus hyperactive over collections from petrol and diesel as well as GST. The Opposition may make its point with a lot of invective, and it would be best to ignore the barbs while seeing the overall picture and settling GST rates at a more consumer-friendly level to ensure that the economy keeps bubbling too. High taxes also contribute to inflation, and hit the aam aadmi the most.