GoM approves GST cut on Educational Items like Exercise books and Pencils and Hike for High-Value Apparel

The Group of Ministers (GoM) on GST rate rationalisation is believed to be in favour of lowering the tax rate on various commodities, including “education materials,” from 12% to 5% in order to bring relief to significant segments of the population.

According to a source familiar with the GoM’s meetings in Goa on Wednesday, the panel also reached a decision on a proposal to increase the rates of various textile and apparel items above a threshold price of Rs.1,000 from 5% to 12%, or 18%. The measure, according to the source, would help achieve “revenue neutrality” by raising the weighted average GST rate.

The revenue neutral rate (RNR) at the time of GST implementation was 15.5%, but the weighted average GST rate has fallen below 11% as a result of tax rate reductions in a vast number of commodities since the indirect tax regime went into effect in July 2017.

On Wednesday, however, the panel did not address the complicated issue of decreasing or exempting health insurance from the scope of the GST. It also did not address changing the GST’s four-slab structure.

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

Following the October meetings, the GoM will submit a report to the GST Council on rate rationalisation.

Earlier, in an interview with the media, the Central Board of Indirect Taxes and Customs (CBIC) stated that a three-slab GST structure is “very much a possibility” and that discussions are ongoing. Currently, the GST structure comprises four slabs: 5%, 12%, 18%, and 28%.

An official source stated that the GST Council’s fitment committee feels that the current four slab rates should be replaced by a three-slab structure of 9%, 18%, and 27%. The fitment committee has submitted its suggestions to the GoM, which will make a decision on them in future meetings.

The GoM on GST rate rationalisation, led by Bihar Deputy Chief Minister Samrat Chaudhary, consists of six members – Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Kerala Finance Minister K N Balagopal, and West Bengal FM Chandrima Bhattacharya.