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A six-member Group of Ministers (GoM) comprising state finance ministers, chaired by Bihar Deputy Chief Minister Samrat Choudhary, will meet on August 21
Union Finance Minister Nirmala Sitharaman on Wednesday addresses the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation at Vigyan Bhawan, New Delhi.
GST Rate Rationalisation: A six-member Group of Ministers (GoM) comprising state finance ministers, chaired by Bihar Deputy Chief Minister Samrat Choudhary, will meet on August 21 to review the Centre’s GST rate rationalisation proposal. The proposal seeks to streamline the current structure into two primary tax slabs—5% and 18%—and the panel will forward its recommendations to the GST Council.
The GoM includes ministers from Kerala, Uttar Pradesh, Rajasthan, West Bengal, Bihar, and Karnataka. Key discussions will revolve around the Centre’s plan to classify goods and services into ‘merit’ and ‘standard’ categories, while retaining a 40% rate on select items such as sin goods. Under the proposal, most items in the existing 12% bracket would shift to the 5% slab, while many products currently taxed at 28% would move to 18%.
On August 20, Finance Minister Nirmala Sitharaman held discussions with various GoMs on compensation cess, insurance, and rate reforms, stressing the need for structural changes. “The rate rationalisation will provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime,” Sitharaman said.
This marks the first time the Centre has formally presented a GST rejig proposal, as earlier rationalisation measures were primarily driven by GoMs and the GST Council. Previously, the rate rationalisation panel was tasked with suggesting changes to tax slabs and correcting duty inversions in specific sectors.
If cleared by the GoM, the proposal will be taken up by the GST Council in its next meeting scheduled for September, where both Centre and state finance ministers will participate.
According to UBS Securities, the reforms could provide a significant boost to India’s consumption economy. “This potential policy stimulus, along with personal income tax relief ($15 billion), front-loaded rate cuts (100 bps YTD), softer inflation, and improved credit availability, should support household consumption over the next 2–3 quarters,” said Tanvee Gupta Jain, Chief India Economist at UBS Securities.
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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