GST Council unlikely to consider Rate change as elections approach; New chairperson for GoM soon

The Goods and Services Tax (GST) Council is unlikely to consider rate reductions at its next 50th meeting next month.

According to Finance Ministry sources, the central does not intend to make any substantial changes to GST rates or tax slabs until after the 2024 Lok Sabha elections.

“Rate rationalisation is an ongoing process.” However, we are not interested at the moment,” the official stated.

The GST Council, on the other hand, will need to pick a new chairwoman for its group of ministers (GoM) in charge of the rate rationalisation effort. This GoM was led by former Karnataka Chief Minister Basavaraj S. Bommai.

It remains to be seen what adjustments are made to the GoM, given that the final report on rate rationalisation has yet to be filed.

The GoM was formed in September 2021 to evaluate the GST rate system, particularly the inverted duty structure, with the goal of simplifying rates, decreasing classification-related conflicts, and increasing revenue.

Last year, the seven-member GoM published an interim report with recommendations for rectifying the inverted duty structure.

There is also a lack of agreement among the GoM members on changing the GST tax slabs.

GST now has a four-tier slab structure of 5%, 12%, 18%, and 28%. Essential items are either excluded or taxed at the lowest rate, whilst luxury and’sin-goods’ are charged at the highest rate. A cess is also paid on luxury and sin products on the highest slab.