In order to give relief to the common man, the Group of Ministers (GoM) on GST rate rationalization has discussed tax rate tweaks on over 100 items on Thursday, September 26, 2024.
GST Rate Rationalization
This discussion includes items such as lowering taxes on certain goods from 12% to 5%, said the West Bengal Finance Minister, Chandrima Bhattacharya.
They have scheduled the next meeting of the GoM on October 20, said Ms. Bhattacharya.
Further adding that rationalizing taxes on bicycles and bottled water will be part of the discussion.
Besides this, the six-member Group of Ministers (GoM), also took up the issue of tax rate cut on medical and pharma-related items in the 12% slab and decided to discuss it in its meeting next month.
The GoM also discussed the possibility of raising tax rates on some items, including aerated water and beverages, from the current 28 per cent GST, plus cess.
This move is to make good the revenue loss that will be incurred on account of lowering the tax rate on such items.
The goods and services tax (GST) is a four-tier tax structure with slabs at 5%, 12%, 18%, and 28% presently.
The tax of up to 40% can be imposed on goods and services, as per GST law.
Mr. Bhattacharya further said, “The average tax rate under GST has fallen to 11.56% in 2024. West Bengal has suggested that the decision taken at the 23rd meeting of the GST Council in which tax rates were slashed on 178 items by pruning the 28% slab should be revisited. This would help to garner more revenues while at the same time give relief to the common man by bringing items down to 5%.”
Further Deliberation In Next Meeting
Moving ahead, the GoM plans to further deliberate on the views of its members in the October 20 meeting.
They would place their recommendations before the GST Council, which is chaired by the Union Finance Minister and comprises Ministers from all States and UTs.
According to them, the items used by the common man should attract lower tax rates.
Hence, moving food items from 12% to 5% slab would bring relief for them in terms of reduction in prices.
They have also suggested that some items in the 18% slab like hair dryers, hair curlers, and beauty or make up preparations could be reverted back to the 28% slab.
Further, Bhattacharya added, “There was no discussion on pruning the slabs. The GoM had consensus that the common man should get relief and it also converged that if tax rates are reduced on items for the common man, then it should also look at means to make up for the lost revenue.”
This is due to the fact that states cannot bear any reduction in GST revenue at this point of time.
On the subject of taxing bicycles, the West Bengal Finance Minister said it is an item used by the common man, while there are high-end products, too.
Adding, “We will have to look at reducing the tax rate for those bicycles used by the masses. The GoM will further deliberate on it.”
When it comes to the bicycles, its parts and accessories attract 12% GST, while e-cycles attract 5% tax.
The six-member GoM is formed with Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.
