Kolkata, Sep 19 (PTI) The recent rationalisation of GST rates is unlikely to pose a fiscal burden on the government, ratings firm Crisil said.

In its latest report, the ratings firm said the government has estimated a net loss of an annualised Rs 48,000 crore in the short term on account of GST rationalisation.

The total GST collections in the previous fiscal were Rs 10.6 lakh crore.

Hence, the loss does not seem significant, the report said.

The Goods and Services Tax (GST) Council recently decided to rationalise the tax rates and have a two-rate structure of 5 per cent and 18 per cent. The revision, to be effective from September 22, will reduce the prices of a large number of products and services.

The GST simplification from four to two slabs can bring more goods and services under the formal net, which would gradually support tax buoyancy over the medium term, the Crisil report said.

Before the rationalisation of the GST rates, the majority (70 per cent to 75 per cent) of the revenue came from the 18 per cent slab, it said.

Only five per cent to six per cent of revenue came from the 12 per cent tax rate slab, and 13 per cent to 15 per cent from the 28 per cent slab.

The ratings firm said that reducing tax rates on items from 12 per cent may not render significant revenue loss.

Rates are unchanged on several fast-growing services like mobile tariffs.

New services such as e-commerce delivery were brought under the GST ambit and will be taxed at 18 per cent.

An increase in disposable incomes due to benefits on certain mass consumption items could further drive up their demand and tax collections, the report said.

Producers passing tax changes onto the consumers is a key factor which would also determine the spending pattern of the latter, it added. PTI DC BDC

GST rate rationalisation creates a two rate framework and may widen the formal tax net, supporting medium term revenue buoyancy. The GST rate rationalisation implements a two rate structure of 5% and 18% effective September 22, with an estimated short term annualised net loss deemed modest relative to prior collections. Simplifying from multiple slabs is expected to broaden the formal tax base and support medium term revenue buoyancy. Revenue before revision was concentrated in the higher slab; reductions from mid tier rates are not expected to cause significant loss. Several fast growing services remain at existing rates, new services (including e commerce delivery) are taxed at the higher rate, and demand effects depend on consumer pass through and disposable income changes.