Congress leader and former GST Council member Krishna Byre Gowda has cautioned the Council that if it were to go ahead with any increase in GST rates on essential items, it will only worsen the situation for low-income group families with perilous impact on the economy.
Raising the rates on essential products will further squeeze the spending power of large sections of people. GST Council is considering major changes in the GST rates to shore up indirect tax revenue.
He further added that, the Centre, has provided tax cuts to the super rich through reduction incorporate tax rates to the tune of about Rs 1.45 lakh crore, and any savings that may accrue to corporate will take 3-5 years to translate into investments.
The tax breaks provided to corporates have hurt the government finances, and to manage it, the government is now proposing increase in GST rates. This is going to be a double whammy for two-thirds of Indians, as well as the larger economy.
The consumption levels of the rich, upper middle and middle classes have more or less saturated, and there is very little scope to increase their spending on consumption. The government would do well to ensure there is more money available in the hands of the consumers, who will use it to purchase essential commodities. Every rupee spent will have a multiplier effect of five to six rupees.
Whatever the government decides, the people can just hope that there are no significant increase in the tax rates.https://vsctaxsol.com/IDE/blogdetail/?Title=Raise_in_GST_rates_will_only_have_a_perilous_impact_on_economy