Goods and services in the 18 per cent slab are estimated to contribute nearly three-fourths of the total GST collection, the Finance Ministry informed the Lok Sabha on Monday. It also highlighted that the average GST rate had come down to 11.6 per cent by the end of the fiscal year 2023-24.
The Ministry said over ₹800 crore of GST evasion had been detected following investigations into 17 crypto exchanges.
RNR and GST collection
On the issue of the average GST rate, Finance Minister Nirmala Sitharaman, in a written answer in the Lok Sabha, said that the committee headed by then Chief Economic Advisor Arvind Subramanian on possible tax rates under GST had suggested that the Revenue Neutral Rate (RNR) should be between 15 per cent and 15.5 per cent.
“Based on the current data of GST returns available with the Goods and Services Tax Network, the average GST rate for the financial year 2023-24 is 11.64 per cent,” she said. RNR is the rate determined post-GST to ensure that there is no shortfall in collection compared to the pre-GST regime. It would be possible if the GST rate is at par with or close to the combined pre-GST rates (Central and State levies).
Asked whether nearly 60 per cent of all consumer items attract a GST rate of 5 per cent or less, while less than 3 per cent of consumption items fall under the 28 per cent bracket, she said that no such data is maintained by the Ministry. However, she highlighted a media article that mentioned about 60 per cent of the average monthly per-capita expenditure (MPCE) is either exempt or subject to a lower tax rate (up to 5 per cent GST), and only 2.3 per cent of the average MPCE is taxed at the 28 per cent GST rate.
She also clarified that there is no bitterness between the Centre and the States on GST. “GST share to the States is settled on a regular basis as provided under the GST law,” she said.
In response to another question, Minister of State in the Finance Ministry, Pankaj Chaudhary, said in a written reply that, based on data collected from taxpayers through returns, the amount of GST collected at different tax rates cannot be calculated. However, it is estimated that the proportion of GST collected (excluding Compensation Cess and other payments) under various tax slabs in the financial year 2023-24 shows that 70-75 per cent of the collection came from goods and services in the 18 per cent slab.
Goods and services in the 28 per cent slab are estimated to have a share of 13-15 per cent, while those in the 5 per cent slab have 6-8 per cent, and those in the 12 per cent slab are estimated to have a share of 5-6 per cent, he said.
Crypto exchanges
Talking about cases booked against cryptocurrency exchanges for GST evasion, Chaudhary said in a written reply that a total of 17 entities had been booked. A total of ₹824 crore in tax evasion was detected, with just one entity, Nest Services Limited (a Binance Group company), accounting for over ₹700 crore. Of the total detected, ₹122 crore has been recovered.
As on date, a total of 47 Virtual Digital Asset Service Providers (VDASPs) have been registered as Reporting Entities with the Financial Intelligence Unit-India under the Prevention of Money Laundering Act, 2002, Chaudhary said.
