A six-member Group of Ministers (GoM), headed by Bihar Deputy Chief Minister Samrat Choudhary, will meet in Goa on Tuesday and Wednesday to discuss tariff rates on more than 100 products, including fertilizers, handicrafts and textiles, according to sources.
The suggestions from the panel will serve as the basis of a report to be presented at the 55th meeting of the Goods and Services Tax (GST) Council in November. Negotiations on buildings will also include a compensation plan that could have a major impact on the sector. “It is expected that the meeting will review the results of the evaluation of 90-100 items, including the assessment of houses and costs, which are important topics to be discussed,” said a source familiar with the matter.
The panel includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh Khimsar, and Kerala Finance Minister KN Balagopal.
Currently, GST operates under a four-tier structure with slabs of 5 percent, 12 percent, 18 percent, and 28 percent.
Essential items are either exempt or taxed on the lowest slab, while luxury and non-essential goods are subject to the highest slab.
Luxury goods and sins incur a surcharge on top of the maximum rate of 28 percent.
“Fixing the GST rates may not be an easy task for the GoM committee, as socio-economic factors will play an important role. While adjustments in rates for certain products may be possible, major changes—like combining 12 percent and 18 percent or 12 percent and 5 percent rates—may take time,” said Harpreet Singh, partner at Deloitte India. “Changing the list of essential items of daily use can also be a challenge, as it may result in the blocking of tax credits,” said Singh.
Although there have been discussions about combining the 12 percent and 18 percent tax brackets, no proposals have been made so far.
Currently, the average GST rate is around 12.2 percent, which has fallen below the revenue neutrality rate of 15.3 percent, making it necessary to start discussions on considering the GST rate.
Inside sources indicate that the panel will prioritize simplified tax rates for the real estate sector, which has long sought more clarity on GST rates for materials and services.
At the August meeting, the ministerial delegation largely agreed to maintain the existing four-tier tax structure; however, they requested that a panel of experts appointed by the Council analyze the revenue effects of certain items and collect the necessary information.
First published: Sep 24 2024 | 1:15 AM IST