The Centre is exploring the possibility of clubbing the three GST rates of 5, 12 and 18 per cent into two, revenue secretary Tarun Bajaj said on Monday.

The Centre is even willing to assess the possibility of a single GST rate, Bajaj said.

Addressing an Assocham meeting here on Monday, Bajaj said the rate rationalisation exercise of the GST Council is a result of introspection of GST, five years after its rollout, and the policymakers do not have a “fetish” to raise the tax rates to the revenue-neutral level of 15.5 per cent.

The government intends to continue with the top GST slab of 28 per cent for luxury and sin goods.

“Of the 5, 12, 18 and 28 per cent, we would have to continue with 28 per cent because in a developing economy, in an economy with so much of income disparity, there would be some luxury and sin items that would and should attract a higher rate of taxation.”

“But, whether on 5, 12 and 18 (per cent), we can bring down to 2 rates to start with and then see how the country grows and whether there is a capacity to bring it to one rate or not is something to be seen. It is a very difficult challenge,” Bajaj said.

"We keep talking of RNR (revenue-neutral rate) of 15.5 per cent and the present rate being 11.6 per cent, may be gone up to 11.8 or 11.9 per cent with inverted duties being removed.”

“What is it? are we looking at we should reach a rate of 15 per cent? I really do not think there is any fetish in the minds of policymakers that we have to reach that particular rate,” Bajaj said.

The secretary said this is the time after five years to introspect and see how the GST rate structures have panned out, whether there is a need to lessen the number of rates than what they presently are and what are the commodities that can go into higher rates and which can come into lower rates.

"I think, we as policymakers and states now are looking at GST from this eye and not having this objective that I have to somehow increase rates in some commodities to reach that 15 per cent odd rate,” Bajaj added.

The next GST Council meet will be held in Madurai in August.

Under the GST, a four-rate structure that exempts or imposes a low rate of tax of 5 per cent on essential items and a top rate of 28 per cent on cars is levied. The other slabs of tax are 12 and 18 per cent.

The GST Council has set up a group of ministers to suggest the rationalisation of the existing rates.

The plan

■ Cut 5%, 12%, 18% slabs to two or even one

■ Highest 28% slab to stay

■ No move to bring rates on par with 15.5% revenue-neutral rate