The rationalization of GST rates will be influenced by the nature of the coalition government and a revitalized Opposition in Parliament. Analysts believe that adjusting the rates is a complex task and could potentially lead to inflation. One proposal is to reduce the number of rates to three from four. Inflationary concerns have hindered attempts to streamline the tax system, and experts believe these challenges will continue. A committee is working on the rate rationalization exercise for 1,200 categories of goods and all services. Complications in policy decisions and legislative delays are expected due to new political dynamics. There is a need to reconsider exemptions and input tax credit restrictions, which have been major sources of litigation. A simplified rate regime would help reduce litigation, and clarifications on technical aspects are expected from the new government.
Source A2ztaxcorp
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