18.05.2023: GST rate cuts in limbo as elections loom; Council to appoint new chairperson for GoM

The Goods and Services Tax (GST) Council is unlikely to take up any rate rationalisation at its upcoming 50th meeting to be held next month.

Finance Ministry sources said that the centre is not planning any major rationalisation of GST rates or tax slabs until after the 2024 Lok Sabha elections.

“Rationalisation of rates is a continuous exercise. However, we are not keen on it currently,” the official said.

The GST Council will, however, have to appoint a new chairperson for its group of ministers (GoM) leading the rate rationalisation exercise. Former Karnataka chief minister Basavaraj S. Bommai chaired this GoM.

It remains to been what changes are made to the GoM, given that it has not submitted the final report on rate rationalisation.

The GoM was set up in September 2021 to review the GST rate structure of, including fixing anomalies in the inverted duty structure, with the objective of simplifying rates, reducing classification-related disputes and enhancing revenue. 

An interim report has been submitted by the seven-member GoM last year with suggestions for correcting the inverted duty structure. 

There is also lack of consensus among the members of the GoM with respect to revising the GST tax slabs.

Currently, GST has a four-tier slab structure of 5, 12, 18, and 28 per cent. Essential items are either exempted or taxed at the lowest slab, while luxury and ‘sin-goods’ ‘attract the highest tax rate. On the top of the highest slab, a cess is also levied on luxury and sin goods.

Source: Business Today

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