A top tax committee is set to weigh an increase in India’s goods and services tax (GST) slabs to raise an extra ₹3 trillion revenue annually, a person aware of the plans said.
Proposals to increase the 5% slab to 7% and the 18% slab to 20% will be examined by a group of state ministers set up by the GST Council, the person cited above said on condition of anonymity. The additional tax revenue will be shared equally by the Centre and states.
The tax inflation will help stabilize tax revenues from the Centre, which is facing a shortfall due to the recent fuel duty cuts and create space for spending on welfare schemes. Additionally, it will save States from the upcoming fiscal cliff when the GST compensation from the Central Government expires in June next year.