gst: Recent GST rate cut credit negative: Moody's

NEW DELHI: Rating agency Moody's today said the recent GST rate cuts on 88 items will weigh on government's revenue collection and is 'credit negative'.

The GST Council, Chaired by the Union Finance Minister, last week and other issues.

"We estimate a loss of 0.04 per cent-0.08 per cent of GDP annually.

"Although the proportion of income loss is small, the vacillation continues to increase," Moody's said in a statement.

It is said that the government has had a revenue growth rate of 16.7 per cent, which ends March 2019, and GST collections will be an important driver of future government revenue because of a general tax base and tax buoyancy.

"The tax cuts, which follow the cuts in January 2018 and November 2017, will be weighed on the government's revenue collections and are credit negative because they will pressure the government's fiscal consolidation effort, which is already diminished relative to the original fiscal deficit targets set last fiscal year, "Moody's said.

The government expects an additional 1.5 percent of GDP in the medium-term. Despite initial disruptions to the GST implementation, GST collection has increased since December 2017, but it has also increased its share of Rs 7.4 lakh crore (USD 100 billion) for the full fiscal year, it added.

As per estimates, the recent goods and services tax (GST) rate would be reduced to about Rs 8,000-10,000 crore, but the government would loss.