Recently announced large-scale reduction/abolition in GST rates on certain commodities is likely to result in revenue-decrease through GST, which can be more than compensated by plugging loopholes through claims lodged through Input-Tax-Credit (ITC).
Input-Tax-Credit system in GST-system in manufacturing-sector is biggest corrupt practice of tax-evasion where left-out GST-invoices by ordinary customers are sold by traders to consuming manufacturers or producers to avail false Input-Tax-Credit where cash is paid back by traders to those purchasing left-out GST-invoices by actual consumers bringing more currency in circulation, This is the main reason of basic motive of currency-demonetisation on 08.11.2026 being failed where currency in circulation rapidly increased rather than projected decrease.
Rather study should be made if with reduction in GST rates, Input-Tax-Credit can be altogether abolished from manufacturing/producing sectors, retaining it only on tradable commodities. Claim of Input-Tax-Credit is there when senseless provision to provide Input-Tax-Credit exists on expense-items which are debited as expenses in profit-loss accounts of traders and manufacturers.
must not also be allowed on assets for which depreciation is claimed in preparing balance-sheets. Such abolishing benefits of Input-Tax-Credit on expense-items and assets will in no way affect normal consumers, but will result in heavy increase in revenue-earning through GST. Earlier unmindful policy-framers brought clutch-plate and clutch-bearing under different GST-slabs of 18 and 28 per cent. Likewise, similar items sold by confectioners like sweets, biscuits, namkins (salted food-items) etc used to attract different GST-slabs with luxury sweets causing diabetes attract just 5-percent GST while namkins (salted food-items) attract 12-per cent GST.
Too many classifications of commodities (more than 9000 in numbers) confuse consumers about new GST tax-rates on different commodities. PIB-notifications dated 03.09.2025 issued by Press Information Bureau giving an extra-long list of change in GST-rates to be effective from 22.09.2025 is beyond understanding of consumers if irrationality like referred above earlier existing in different rates of car-parts and confectionary-items is removed or not. While normal fabric will have GST rate of 5-percent, but sarees will be having GST-rate of 18-percent.
In fact, with fast changing trend of switching over to western-styled garments used by Indian ladies, use of Sarees as preservation of Indian culture should have lower GST-rate of 5-percent like readymade garments valued up to rupees 2500.
Invoices for items like gold-jewellery can be drawn in two parts, one for metal and embodied items and the other for making-charges so that 18-percent GST may be payable only on making-charges while gold/silver and embodied items may attract 5-percent GST-slab. Cess on extra-luxurious items should be replaced by additional GST-slabs in multiples of 30-percent, also bringing petroleum products under GST-regime to ensure uniform pricing of petrol and diesel in all states. Abolishing 12-per cent GST-slab will be more than compensated by clubbing lower slabs of 3 and 5 per cent into single 5-per cent GST-slab.
All government-services including like railway-fares and select postal-items (like Speed Post) should be exempted from GST to avoid unnecessary government-accounting by putting tax from one government-pocket to other. Otherwise also, it was indeed silly to have some postal-services under GST and rest others without GST.
There have been cases where some government-departments had to pay penalty for default in filing GST-returns or late payment of GST. Exempting all government-services from GST will result in saving of government-resources and man-power where different government-departments will be free from filing GST-returns.
However, any revenue-loss in case all government-services are exempted from GST should be prevented by absorbing present applicable GST in cost of government-service itself. As far as possible, cost of government-services should be in round figures. For example, presently local Speed Post tariff for first 50-gms slab is `18 which can be marginally increased to ` 20 or `30 both for local and non-local Speed Post services for every 50-gms rise in weight-slab.
It is surprising that effective 01.09.2025 with Registered Post abolished, and new postal-server introduced in the country, net rate of `17 (inclusive of GST0 is there for local Speed Post while as per calculations, it should be `17.70 (rupees 15 postal-tariff + `2.70 as GST @ 18-percent) which was earlier rightly charged in round figure of `18. Cess should be replaced by additional GST slabs in multiples of 30 or 60-per cent for simplicity and rationality. All petroleum products which are presently out of purview of GST, can then be brought under GST making prices of all petroleum products uniform throughout the country. It is highly improper that prices of petroleum products vary by even more than 30-per cent in the country. While petrol was priced at just `82.46 per litre in Andaman & Nicobar on 09.05.2025, same was priced at `109.60 per litre in Andhra Pradesh with petrol costing `94.77 per litre in Delhi on the same date 09.05.2025.
Petroleum products in case becoming uniform after being under GST network then can be in round figures. Petrol, diesel, kerosene then can be priced in multiples of rupee one inclusive of GST while LPG gas-refill can be in multiples of `50 inclusive of GST. It will not practically affect consumers because LPG delivery-persons usually keep balance money as “tips”! GST rates should be further simplified and rationalised by replacing cess by additional GST tax-slabs in multiples of 30-per cent abolishing new GST tax-slab of 40 per cent Since this higher slab of 40 per cent consists mainly luxury items, these can be easily put under suggested 60-percent slab or any other multiple of 30-percent slab.
While road-infrastructure in cities require less number of cars, it is illogical to reduce GST-rate on small cars to 12-perecent. Instead use of three-wheeler auto-rickshaws as private vehicles should be encouraged. GST-rate on small cars can be in 30-per cent GST-slab (suggested to be changed from 40-per cent) with costlier cars can have GST-rate of 60 per cent. Composite scheme of GST-system is largely being misused with most confectioners having daily sale in lakhs of rupees do not issue invoices.
It should be made non bail-able cognizable offence if confectioners and others do not issue invoices themselves without even asked for. They should also be directed to accept payment by credit/debit-cards with compulsion of having two card-swapping machines to avoid excuse for avoiding accepting card-payment in name of card-swapping-machine not in order. NComplete GST system and website should be overhauled in a manner that educated persons may by themselves get registered under GST and also may be able to file GST returns themselves.
Useless system of nominal Tax-Deducted-At-Source for GST, which is hardly used in practice, should be altogether abolished. Or otherwise, any such deducted tax should be auto-reflected in GST-accounts of affected ones, abolishing cumbersome practice of filing a new monthly return to get credit of deducted GST. With goods normally brought under a highly reduced GST rate of 5-per cent, service sector should also have reduced GST-rate of 5 per cent instead of present 18 per cent. It is totally illogical to keep lawyers out of purview of GST-regime. Announcement once made to increase exemption- limit from GST for service sector to `50 lakhs from present `20 lakhs should be implemented.
