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With all eyes on the GST rate rationalisation exercise, which aims to ease the tax burden on the common man, CNBC-TV18 has learnt from sources that the government is not in favour of introducing a new “special rate” slab of 35%, as proposed by the Group of Ministers (GoM) on GST rates.
Union Finance Minister Nirmala Sitharaman has said that Goods and Services Tax (GST) rates will be reduced further as the process of rationalising tax slabs in nearing completion.
A growing clamour for GST rationalisation has the Centre and states trying to find a common ground over the GST roadmap. While the Centre is keen on doing away with the 12 percent GST slab, states on the rate rationalisation panel have, so far, only moved items between the existing rates, government sources said.
The Indian middle class’ demand for a cut in goods and services tax (GST) may soon be delivered. The GST Council is working on rationalising the rate slabs, Finance Minister Nirmala Sitharaman told the Parliament.
Even as the government announced rationalisation of income tax rates in the Budget, there is also work going on to simplify and rationalise the Goods and Services Tax (GST) regime. Discussions between Centre and states have taken place to undertake not just GST rate rationalisation but also simplify the structure, with a particular focus on doing away with the 12 per cent slab, The Indian Express has learnt.
Indian Sellers Collective, an umbrella body of trade associations and sellers across the country, has urged the finance minister and the GST Council not to accept some of GST rate rationalisation suggestions, including the proposal for inclusion of a special rate of 35 per cent on some products. The sellers body is of the view that a fifth GST slab of 35 per cent on demerit goods such as aerated beverages, cigarettes and tobacco, and pricing-based rate structure will materially and fundamentally alter the country’s GST framework with devastating outcomes.
The proposed Goods and Services Tax (GST) rate rationalisation by the Group of Ministers (GoM) has received a mixed response from states, with several expressing apprehensions about the timing and potential impact of the changes.
The finance ministry on December 9 reiterated “that no report from the Group of Ministers (GoM) to look into rate rationalisation is pending for consideration of the GST Council.”
A Group of Ministers (GoM) was constituted to look into the GST rate rationalization apart from certain other issues referred by the GST Council. The GoM comprises of Hon’ble Ministers from the States of Bihar, Uttar Pradesh, Rajasthan, West Bengal, Karnataka and Kerala with the Hon’ble Deputy Chief Minister of Bihar as the Convenor.
Three groups of ministers (GoMs) under the Goods and Services Tax (GST) Council met recently and reportedly decided to recommend various rate tweaks, exemptions for lower health insurance covers, and a merger of the “compensation cess” with the highest tax slab at a future date. The GoM on rate rationalisation (GoM-RR), which has the crucial mandate for a comprehensive restructuring of the GST slabs with the idea to reduce their number and appropriately revise the tax’s base, seems in no haste to go for an overhaul of the tax structure, even though it has a tight November-end deadline to firm up its views.