This move is proposed so that the states do not have to depend on the centre for compensation. Increasing the GST percentage will help them in raising revenue on the goods. The proposal includes moving some goods of mass consumption to 3% and the remaining ones to 8% categories. Currently, GST levies taxes in a specific four-tier percentage category. These are 5%, 12%, 18% and 28%. Out of all these goods, gold and gold jewellery attract 3 per cent of tax.
Not all goods attract GST taxes. There are some goods such as unbranded and unpackaged food items that do not attract any sort of GST taxes.
There are the following propositions are proposed in the proposal which will be presented in the next meeting of the GST council. These are given below:-
States want to become self-sufficient by not asking the centre for compensation to raise their revenue. It is implied that the states do not want to depend on the centre for bridging the gap in GST collection. Over the years, the GST council has succumbed to the demands of the trade and lower GST rates. Increasing tax rates now seems like the only possible way for the GST council to raise revenue without asking the centre for compensation.