India may increase taxes on some goods and services in a step toward moving to a simpler structure with fewer rates. A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system.
India currently taxes goods and services produced in the country at 5%, 12%, 18%, and 28%, with some essentials such as food items attracting the lowest rate and sin and luxury goods with the highest levy.
The two lowest rates could be raised by a percentage point each to 6% and 13%, respectively. While the rates would eventually be trimmed to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month.
The plan to raise GST rates comes at a time when key Indian states are heading for polls early next year, possibly making it an unpopular move in a nation only just recovering from the devastation caused by the coronavirus pandemic.