GoM to Meet Likely to Discuss GST Rate Rationalisation and Merging 12% and 18% Slabs on Sep 25

The Group of Ministers on GST Rate Rationalisation, led by Bihar Deputy Chief Minister Samrat Chaudhary, will meet in Goa on September 25 to examine possible changes to tax slabs and rates.

The six-member GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, is expected to focus on the idea of merging the 12% and 18% GST slabs. While some states are skeptical about such changes, discussions are focused on optimising the tax structure.

The six-member Group of Ministers (GoM) last convened on August 22 and presented a status report to the GST Council on September 9. During the August meeting, the panel directed the fitment committee, which included tax officers from the Centre and states, to examine the impact of tax rate changes on specific goods and gather additional data.

At present, the GST framework consists of four slabs – 5%, 12%, 18%, and 28%, with essential goods exempt or taxed at lesser rates, and luxury or “sin” goods subject to the highest slab plus an extra cess. However, several states, such as West Bengal and Karnataka, have raised concerns about changing GST rates.

The average GST rate has declined by about 12% to below the revenue-neutral rate of 15.3%. This has prompted the need to begin discussions about GST rate rationalisation.

After the GoM meeting in August, West Bengal Finance Minister Chandrima Bhattacharya stated, “I have said there should be no changes in the GST slab”.

Karnataka Revenue Minister Krishna Byre Gowda stated that the GoM must assess whether there is a need to “disturb” the GST system, which has now largely settled.

“What are you achieving by disrupting it? We said we’d discuss it (reducing slabs) at the next meeting,” Byre Gowda said.

The GoM consists of six members, including Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, and Kerala Finance Minister K N Balagopal.

Meanwhile, on September 9, 2024, the 54th GST Council established a new GoM on GST rate reductions on medical health insurance, which will present a report by the end of October. FM Nirmala Sitharaman stated that the GST Council meeting in November will decide on a reduction in health insurance rates.