'GST reforms, not fiscal burden on govt'

New Delhi: The recent Goods and Services Tax (GST) rationalisation will not have a significant fiscal burden on the government, a Crisil report has said. The government has estimated a net loss of an annualised Rs48,000 crore in revenue in the short term on account of GST reforms.

Total GST collections in the previous fiscal were Rs10.6 lakh crore; hence, the loss does not seem significant, according to a Crisil Ratings report. Citing the method of recalibration of the tax rates, the report emphasised that the move to reduce rates will unlikely to pose a major pressure on the government revenue. "As of fiscal 2024, the majority (70-75 per cent) of GST revenue came from the 18 per cent slab. Only 5-6 per cent was from the 12 per cent slab and 13-15 per cent from the 28 per cent slab," the report noted. Reducing the tax rates of items from 12 per cent may not render a significant revenue loss.

Meanwhile, tax rates are unchanged on several fast-growing services, such as mobile tariff charges. New services such as e-commerce delivery were also brought under GST and are taxed at 18 per cent, and some increase in disposable incomes due to benefits on other mass consumption items could further drive up their demand and tax collections, the report highlighted.