Vivek Johri, Chairman of CBIC, has stated that any changes to GST rates should be implemented gradually to ensure stability of revenues. He expects the current slab structure to eventually converge towards three or four rates.
Vivek Johri has indicated that any potential changes to Goods and Services Tax (GST) rates will require careful consideration and may need to be implemented gradually. The chairman of the Central Board of Indirect Taxes and Customs (CBIC), in an interview with Moneycontrol, emphasised the importance of revenue efficiency and suggested that rate rationalisation should be approached cautiously to ensure the stability of consolidated revenues.
The 50th meeting of the GST Council is scheduled to take place on July 11 at Vigyan Bhawan in New Delhi.
As revenue efficiency improves, as per Johri, there will be a greater scope for accepting rate rationalisation. However, he stressed on the need for a calibrated approach, indicating that it may not be possible to implement all changes at once. A gradual glide path would be necessary to ensure that any consolidation of revenue is not adversely affected, he told the publication.
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Regarding the current slab structure, Johri expressed a general expectation that it would eventually converge towards three rates: a median rate, a merit rate, and a demerit rate. He believes that reforms often occur during favourable times or deep crises, and fortunately, the situation does not warrant immediate drastic measures.
No system is perfect, Johri acknowledged while raising the question of whom the current rate structure truly affected. While there may be arguments for moving towards three rates, Johri said that a four-rate structure may also be reasonable, considering the imperfections inherent in any system.
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"If this kind of a structural reform has to happen, somebody could argue – who is the current rate structure hurting? Is it just a matter of optics that you want to move to three rates? Four rates are fine. Yes, there is some inversion, but no system is perfect. That can also be an argument," Johri told Moneycontrol.