GoM for GST cut on educational items, hike for high-value apparel

The Group of Ministers (GoM) on GST rate rationalisation is understood to be in favour of reducing the tax rate on many items including ”education materials” to 5% from 12% to provide relief to large sections of people.

According to a source privy to the discussions held by the GoM in Goa on Wednesday, the panel also reached an understanding on a proposal to raise the rates of many textile and apparel items beyond a threshold price of Rs 1,000 from 5% now to 12% or 18%. The move, according to the source, would help in achieving “revenue neutrality” by raising the weighted average GST rate.

The revenue neutral rate (RNR) during the introduction of GST was determined at 15.5%, but the weighted average GST rate got reduced to below 11% due to reduction in tax rates in a large number of items since the indirect tax regime was rolled out in July 2017.

On Wednesday, however, the panel did not take up the contentious issue of reducing tax on health insurance, or exempting it from the GST’s ambit. It also did not discuss tweaking the four slab structure of GST.

“These will be discussed in the next GoM meetings on October 19 and October 20,” said the source. “The left-over issues, untouched today will also be discussed in the next meetings.”

The GoM will submit a report to the GST Council on rate rationalisation after the October meetings.

Earlier in an interview to FE, Central Board of Indirect Taxes and Customs (CBIC) had said that a three slab GST structure is “very much a possibility”, and discussions are going on around it. Presently the GST structure has four slabs – 5%, 12%, 18%, and 28%.

An official source had earlier told FE that the fitment committee of the GST Council believes that a three slab structure – of 9%, 18%, and 27%, should replace the current four slab rates. The fitment committee has submitted its recommendations to the GoM, which will take a call on it in subsequent meetings.

The GoM on GST rate rationalisation, under Bihar Deputy Chief Minister Samrat Chaudhary has six members, which includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Kerala Finance Minister K N Balagopal, West Bengal FM Chandrima Bhattacharya.

Source: FINANCIAL EXPRESS