Ministers' panel yet to take a view on GST rate rationalisation

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A group of ministers, tasked by the Goods and Services Tax Council to look into rate rationaliation, hasn’t taken a view on the issue yet, an official source said.

The seven-member GoM (Group of Ministers), which is led by Karnataka chief minister Basavaraj S Bommai and includes finance ministers from West Bengal, Kerala Goa, Bihar, Uttar Pradesh and Rajasthan as members, is likely to meet early next month.

The group hasn’t taken up a proposal to raise the lowest or threshold slab under GST to 8 per cent from 5 per cent, said the source who wished not to be identified.

Any recommendation of the panel would be placed before the GST Council, headed by Union finance minister Nirmala Sitharaman and including representatives of all states and Union Territories, for a final decision.

No dates for the GST Council meeting have so far been announced but it is likely to meet in the second half of May.

With the inflation rate spiking in recent months, policymakers will take a hard look at any change in GST rates lest it fuels price rise, the source said.

The GST has a four-tier structure, consisting of 5 per cent, 12 per cent, 18 per cent and 28 per cent rates.

Additionally, there are special rates for some goods such as precious metals.

There was a thought in some quarters that the slab of 5 per cent may be broken into 3 per cent and 8 per cent, levying the lower tax rate on essential items.

But no view on rate rationalisation has yet been taken by the GoM, let alone the GST Council, the source said.

The call on tinkering with the rates is a political decision and the same will weigh when the GST Council takes a view on it, the source said.

The GST Council — the highest decision-making body that was set up after more than a dozen central and state taxes such as excise duty and VAT was subsumed into a uniform nationwide levy — had set up the GoM on rate rationalisation at its September 2021 meeting in Lucknow.

The group was asked to review the exempt goods to expand the tax base, suggest changes to simplify the rate structure and garner the required resources.