The Group of Ministers appointed for GST is scheduled to have a meeting on June 17. The current tax rates are expected to be rationalized.
The Group of Ministers (GoM) is expected to discuss the current rate rationalization. The panel is expected to finalize its proposal on June 17. The tax slabs for Goods and Service Tax (GST) may shift according to the new proposal. The current 5 percent may rise to 7 or 8 percent and 18 percent to 20 percent. The council is also expected to consider the merger of the existing tax slabs.
The agenda for discussion, also mentions the council’s intention to rephrase the list of exempted items under GST. The correction of the inverted duty structure is also in the spotlight, with a key focus on the textile sector. The rising inflation and geopolitical developments are already affecting the tax rates and returns. The new decisions will be based on these as well as the current economic conditions. The finance minister has mentioned that with the current rate of inflation, rationalizing rates will have a limited scope. The discussions about merging the existing four tax slabs and bringing them down to two are prominent.
About GST
The Goods and Services Tax was introduced by the Government of India, with a vision, ‘One Nation, One Tax’. The tax was brought into effect in July 2017. It replaced the multiple taxes that existed. It is an indirect tax applicable on goods and services. It is a destination-based, consumption tax. There are three main classifications for applying the tax: Central (CGST), State (SGST), and integrated (IGST). It applies to all goods and services except alcoholic beverages for human consumption and 5 petroleum products. The current tax rates are zero percent on essentials, 12 or 28 percent on manufactured goods, and 28 percent on consumer durable goods.
In May, this year the total tax collection was recorded at ₹1.4 crores, showing a rise of 44 percent from last year but a decline of 16 percent from April 2022.
The Group of Ministers
The GST council appointed the GoM in 2021, to discuss the details of tax performances and bring changes to the current policies. The group is led by Karnataka’s Chief Minister Basavaraj Bommai. The group is formed by CMs of other states. Currently, the committee includes 7 states namely, Bihar, Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Goa, and Kerala. The group is headed by union finance minister Nirmala Sitaraman. Since the appointment of the group several meetings have been conducted. The group had its first meeting in November 2021. Several discussions were recorded after that and the council is expected to submit its new proposal on June 17. Chairman, Basavaraj Bommai will submit the proposal to head, Nirmala Sitaraman after it is finalized. Further, the proposed decisions will be analyzed and the final verdict will be conveyed by the union finance minister in the next council meeting.
In the last member meeting, the inverted tax for the textile industry was discussed and the decision was postponed due to various reasons. In the next meeting scheduled it is an agenda for discussion but experts say that the change will not be made immediately, considering the upcoming elections in various states. The rise in tax rate is recorded as a concern for citizens as it will worsen the rising inflation in the country and increase the cost of living.
The decision passed in the meeting will be very crucial for the future. It will affect consumer decisions as well as other factors. With the current economic conditions, it is expected that these changes bring a positive shift in the country.
