The Group of Ministers (GoM) on Goods and Services Tax (GST) rate rationalisation is considering raising the price ceiling for the lower tax slab on textiles and footwear to boost affordability and consumption, government sources said.
“The GoM on rate rationalisation may suggest raising the threshold to Rs 1,200 or Rs 1,500, below which a lower GST rate will apply. The idea is to boost consumption by revising the slabs for key sectors like textiles and footwear,” a source told Moneycontrol.
The GoM is now considering allowing textiles priced up to Rs 1,200 or Rs 1,500 to remain within the 5 percent slab. Similarly, footwear priced within that revised range would continue to attract 12 percent GST, with the higher 18 percent slab applying only beyond that limit, he said.
Under the current structure, textiles priced below Rs 1,000 attract a 5 percent GST rate, while those priced above that are taxed at 12 percent. For footwear, items priced up to Rs 1,000 fall under the 12 percent slab, and anything costlier attracts 18 percent GST.
The proposal, if accepted by the GST Council, will be in line with the Union government’s broader efforts to drive demand, following the direct tax relief measures announced in the Interim Budget 2024. Sources said this step could offer meaningful relief to consumers in the mass and middle-income segments, where a narrow price gap often pushes goods into higher tax brackets.
Complementing the Budget push
In the Interim Budget, Finance Minister Nirmala Sitharaman had introduced direct tax relief for individuals under the new tax regime to support consumption-led growth. The proposed GST adjustment would complement that move by easing indirect tax burdens.
“The Budget had already laid the foundation for demand-side revival through personal income tax relief. This follow-up through GST tweaks complements that vision,” the source added.
“Price sensitivity in these sectors is high. A lower effective tax burden on mid-range goods can incentivise volume-driven growth,” he said.
The GoM’s final recommendations are expected to be taken up in the next meeting of the GST Council.
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