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Meeting of the GoM on GST rate rationalisation on Thursday saw states endorsing the Centre’s proposal to streamline the indirect tax system
GST (Image for representation: News18)
A key meeting of the Group of Ministers (GoM) on GST rate rationalisation on Thursday saw states endorsing the Centre’s proposal to streamline the indirect tax system by cutting down the number of slabs to just two — 5% and 18%.
The six-member GoM, headed by Bihar Deputy Chief Minister Samrat Choudhary, agreed to replace the existing four-tier structure of 5%, 12%, 18% and 28% with a simplified framework: 5% for merit goods and services and 18% for standard items. A higher levy of 40% will continue to apply to a limited list of sin goods.
Additionally, the panel has recommended that luxury cars be brought under the 40% slab.
The Group of Ministers (GoM) on GST rationalisation includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.
Finance Minister Nirmala Sitharaman, addressing the panel earlier, said the reforms would “provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime.”
Under the plan, nearly 99% of items currently taxed at 12% will shift to the 5% bracket, while about 90% of goods and services in the 28% category will move to 18%. The Centre has argued that this rejig will simplify the GST structure and improve compliance.
The GoM also examined the Centre’s proposal to exempt GST on health and life insurance for individuals, a move that could result in a revenue loss of around ₹9,700 crore annually. Most states supported the exemption but stressed the need for safeguards to ensure that insurers pass the benefit on to policyholders.
The GST Council is expected to review the GoM’s recommendations at its upcoming meeting for final approval.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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