GST Implication To Be Rs 48,000 Crore, Not Right To Call It Loss: Official

The government's big move to rationalise the Goods and services Tax may not lead to a loss, Revenue Secretary Arvind Shrivastava told reporters this evening as the new, simplified tax slabs were announced.  In one sweep, the government has not only brought down the tax slab for hundreds of items under daily essentials, stationery and farm implements down to 5 per cent, but also removed tax from a chunk of the healthcare sector including health and life insurance and life saving drugs. 

Read: Will Benefit Common Man, Farmers, Middle-Class: PM Modi On GST Overhaul

Amid concern about a possible loss of Rs 50,000 crore, Mr Shrivastava said the revenue implication of the rationalisation would be 48,000 crore. "It would not be correct to term it a revenue loss," he added. 

The lower tax would mean more money in hand for the common man and the government is expecting a boost in expenditure, which would route it directly back into the economy. 

Mr Shrivastava said the government believes that this will be fiscally sustainable. There will be financial buoyancy and compliance will be higher, he said. "We do not expect any major fiscal implication," he added. 

On Wednesday, the GST Council dropped two of the four existing tax slabs and opted for just two -- 5 per cent and 18 per cent. There is also sin tax of 40 per cent which would be applicable to tobacco and super luxury goods including cars and bikes. 

Read: Tobacco Products, Carbonated Beverages: What Comes Under 40% GST

The taxes would be effective from September 22 -- the first day of Navaratri.

But almost all essential items, aspirational goods for the middle class like small cars and air conditioners, farm implements and healthcare items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.

Briefing reporters after a marathon day-long GST Council meeting, Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state.

Read: Individual Life And Health Insurance Policies To Be Exempt From GST

"I think it will have a very positive impact on the GDP... Key drivers of the economy have been given prominence," Ms Sitharaman said when asked about the impact of rate rationalisation on GDP growth.

Labour-intensive industries have been given good support, and agriculture and health industries would also benefit from the rate rationalisation, she said.