The Group of Ministers (GoM) on GST rate rationalisation has reviewed the possibility of revising tax rates on over 100 items, aiming to reduce the burden on the common man, reported PTI.
West Bengal Finance Minister Chandrima Bhattacharya said on Thursday that the GoM is considering lowering the GST on certain goods from 12% to 5%, and the next meeting is scheduled for October 20. Among the key items up for discussion are bicycles and bottled water.
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During the meeting held on Wednesday, the GoM also discussed reducing tax rates on medical and pharmaceutical items currently in the 12% tax slab. Further deliberation on this matter will take place in the October meeting.
To balance potential revenue losses from these reductions, the GoM is exploring the option of increasing the GST on some goods, such as aerated water and beverages, which are currently taxed at 28%, plus cess. “States cannot bear any reduction in GST revenue at this point of time,” PTI quoted Bhattacharya as saying.
Currently, India has a four-tier GST structure with rates of 5%, 12%, 18%, and 28%. As per GST laws, tax rates on goods and services can be raised to as high as 40%. The average GST rate has dropped to 11.56% in 2024, below the revenue-neutral rate of 15.3%. This has triggered discussions on GST rate rationalisation.
Bhattacharya emphasized that reducing the GST on essential items, like food products, from 12% to 5% could significantly reduce prices for consumers. However, some items in the 18% slab, such as hair dryers, beauty products, and similar goods, may see an increase back to the 28% slab.
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“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 common man, then it should also look at means to make up for the lost revenue,” Bhattacharya said.
The GoM will present its recommendations to the GST Council, chaired by the Union Finance Minister, following the October 20 meeting. This council includes representatives from all states and Union Territories (UTs).
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Currently, bicycles and their parts attract a 12% GST, while electric bicycles are taxed at 5%. Bhattacharya indicated that the GoM would consider reducing the GST on bicycles used by the general public.
Essential items under GST are typically exempted or taxed at the lowest rate, while luxury and sin goods attract the highest slab of 28%, with additional cess.
The GoM also includes finance ministers from Uttar Pradesh, Rajasthan, Karnataka, and Kerala.
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