Having opted for multiple rates under the upcoming goods and services tax (GST) regime, India is now looking to keep variations in rates on the same types of products at a minimum to ensure that the tax structure does not get any more complicated.
For example, all types of footwear or mobile phones could attract the same rate.
Single rate for one product group will bring simplicity in the structure and make implementation easier.
Globally, most regimes have a single rate. India has adopted a four-tier tax structure of 5%, 12%, 18% and 28%.
The rate applicable on most products will be 18%. The highest rate has been pegged in the GST law at 40%.
Many experts have said this structure will undermine the basic tenet of GST - a simple structure with at most two rates.
The GST Council now has to decide which goods and services go into which slabs.
The highly anticipated tax reform is expected to lift economic growth by 1-2 percentage points by removing inter-state barriers thus slashing cost and boosting efficiency.
