GST Rate Rationalisation: GoM Considers 12% Slab Removal, Next Meeting on October 20

GST rate rationalisation 12% slab

GST Rate Rationalisation: The Group of Ministers (GoM) on GST rate rationalisation has discussed tax rate changes on over 100 items, including reducing tax on some goods from 12% to 5% to give relief to the common man, West Bengal Finance Minister Chandrima Bhattacharya said on Thursday.

The next GoM meeting is on October 20, she said, adding that tax on bicycles and bottled water will be on the agenda.

The six-member GoM, which met on Wednesday, also discussed tax rate cut on medical and pharma items in 12% slab and will take it up in the next meeting.

To compensate for the revenue loss on account of reducing tax on these items, the GoM also discussed increasing tax on some items like aerated water and beverages from the current 28% GST plus cess.

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Currently GST is a four-tier tax structure with slabs at 5%, 12%, 18% and 28%. But as per GST law, tax up to 40% can be levied on goods and services.

"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 common man by bringing items down to 5%," Mr. Bhattacharya said.

The GoM will take a call on the views of its members in the October 20 meeting and will place its recommendations before the GST Council which is headed by the Union Finance Minister and has Ministers from all States and UTs.

She said items used by common man should have lower tax rates and moving food items from 12% to 5% slab will give relief to them in terms of reduction in prices.

However, some items in 18% slab like hair dryers, hair curlers and beauty or make-up preparations can be brought back to 28% slab.

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"There was no discussion on pruning the slabs. The GoM had consensus that common man should get relief and it also converged that if tax rates are reduced on items for common man, then it should also look at means to make up for the lost revenue," Bhattacharya said, adding that states cannot bear any reduction in GST revenue at this point of time.

On bicycles, she said it’s an item used by common man, there are high-end products too. "We will have to look at reducing the tax rate for those bicycles used by the masses. The GoM will further deliberate on it," she said.

Bicycles and its parts and accessories are currently taxed at 12% while e-cycles are taxed at 5%.

The six-member GoM also has 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.

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