The Group of Ministers (GoM) on goods and services tax (GST) rate rationalisation, which convened in Goa on Wednesday, reviewed the GST rates for over 100 items, including textiles, handloom goods, agricultural products, fertilisers, and educational materials. However, no consensus was reached on any of the items, with further discussions scheduled for next month in Delhi.
“There are certain goods that require further study, which will be carried out by the officers. For ready-made garments, the current proposal is to maintain a 5 per cent GST for items priced at Rs 1,000 and below, while increasing the rate for those above Rs 1,000 from 12 per cent to 18 per cent. However, we argued against this increase, stressing that our thriving market for ready-made garments should not be disrupted,” said West Bengal Finance Minister Chandrima Bhattacharya in a telephonic interview after the GoM meeting.
In addition to Bhattacharya, the GoM, chaired by Bihar Deputy Chief Minister Samrat Choudhary, includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh Khimsar, and Kerala Finance Minister K N Balagopal.
“We should not tax or raise taxes on items that affect common people. This is one side of the issue. We have proposed reductions on many essential items, such as educational materials, which are important for the general public. So, while rationalising rates, we must also ensure revenue is enhanced,” Bhattacharya added, noting that this point had general agreement. The discussion on GST rates for health insurance premiums was deferred to the next meeting, which will take place in Delhi in October.
“On October 19 and 20, there will be two days of meetings for various GoMs in Delhi to address pending issues like health insurance and other topics,” Bhattacharya said.
The outcome of the rate rationalisation discussions will be crucial in shaping the agenda for the upcoming 55th GST Council meeting, expected in November.
During the 54th GST Council meeting, held in New Delhi on September 9, the GoM was tasked with returning after more thorough deliberations. A key item on the agenda was the potential exemption or reduction of GST rates on health and life insurance premiums.
Currently, the GST operates under a four-tier structure with slabs of 5 per cent, 12 per cent, 18 per cent, and 28 per cent. Essential items are either exempt or taxed at the lowest slab, while luxury and demerit goods are subject to the highest slab. Luxury and sin goods also incur an additional cess on top of the 28 per cent rate.
At present, the average GST rate is around 12.2 per cent, which is below the revenue-neutral rate of 15.3 per cent, spurring the need for discussions on rate rationalisation.
A GoM meeting on real estate, also held in Goa on Tuesday, could not reach a consensus on most proposals. The real estate GoM, convened by Goa Chief Minister Pramod Sawant, deferred the proposal to exempt GST on long-term leases granted to the tourism sector, instead suggesting that states declaring tourism as an infrastructure sector would be better positioned to receive such exemptions.
Source: Business Standard
