Exclusive: GoM on rate rationalisation not in favour of merger of GST slabs

The GoM members include Uttar Pradesh Finance Minister Suresh Kumar Khanna, Goa Transport Minister Mauvin Godinho, etc.

The Goods and Services Tax (GST) group of ministers (GoM) on rate rationalisation chaired by Bihar Deputy Chief Minister Samrat Chaudhary, is not in favour of merger of the tax slabs and feels the current four rates need to be maintained, sources said.

The reconstituted GoM held its first meeting on August 22. The other members include Uttar Pradesh Finance Minister Suresh Kumar Khanna, Goa Transport Minister Mauvin Godinho, Rajasthan Medical, and Health Services Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda and Kerala Finance Minister K N Balagopal.

“The reconstituted body held its meeting today. None of the GoM members agreed to any change in the GST slabs. No merger of GST slabs was supported by the GoM. The GoM is of the view that the current four slabs should be retained,” a person familiar with the development told Moneycontrol, on condition of anonymity.

The GoM held its meeting ahead of the GST Council meeting on September 9.

The Council in its meeting next month will discuss the GoM report which will be submitted soon.

The next meeting of the GoM on rate rationalisation is likely to be held around September 23-25.

Currently, essential and semi-essential goods, which constitute 70-80 percent of India's consumption, attract a GST rate of five percent or 12 percent. However, sin goods or luxury items are taxed at 28 percent, contributing significantly to government revenue.

The group of ministers (GoM) for GST rate rationalisation was reconstituted on November 1, 2023.

The government was looking at streamlining the current rates of five percent, 12 percent, 18 percent, and 28 percent into three rates. Reduction in the number of rates to three would need consolidation of any two slabs—either eight percent – median rate of five percent and 12 percent; or 15 percent – median rate of 12 percent to 18 percent.

The GST Council, during its 45th meeting held on September 17, 2021, decided that a Group of Ministers may be formed to look into matters related to rate rationalisation and correction of inverted duty structure. This GoM was earlier constituted headed by Basavaraj S Bommai, CM Karnataka, but was reconstituted when he lost the assembly election in the state.