GoM on GST rate rationalisation discusses cutting taxes on some items

New Delhi: The ministerial panel on GST rate rationalisation on Thursday broadly converged towards retaining a 4-tier slab structure and asked the committee of tax officers to analyse the implication of tinkering rates on some items and present it before the GST council.

The issue of GST on health and life insurance was also raised by some states in the meeting of the Group of Ministers (GoM) on rate rationalisation and referred to the fitment committee, comprising central and state tax officers, for further data analysis.

The suggestions of the GoM will be taken up on the September 9 meeting of the GST Council headed by Union Finance Minister Nirmala Sitharaman and comprising state counterparts.

Talking to reporters after the first meeting of the GoM under his convenorship, Bihar Deputy Chief Minister Samrat Chaudhary said, "Some GoM members are demanding that there should be no change in tax slabs under GST".

"More discussions will happen, and then only a final decision will be taken," Chaudhary said, adding the GoM has received representations from restaurants, beverages and online gaming sectors, which will be reviewed and some of them will be sent to the Fitment committee.

West Bengal Finance Minister Chandrima Bhattacharya stated, "I have said there should be no changes in the GST slab. A presentation will be made before the Council".

The next GoM meeting will be held after the September 9 Council meeting, she added.

Asked if the GoM deliberated on reducing 4 slabs to 3, Bhattacharya said, "That will not happen for now. Slabs will be retained at 5, 12, 18, and 28 per cent. This will be reviewed by the Council now".

Asked if there was discussion on tinkering with slabs, Karnataka Revenue Minister Krishna Byre Gowda said that Goods and Services Tax (GST) has broadly stabilised.

"So why disturb it.. what do you achieve by disturbing it? We said in the next meeting that we will discuss it (reducing slabs)," she added.

On health and life insurance taxation, Byre Gowda said, "We have asked for further report (from fitment committee). We are not sure if it's part of the agenda".

The Opposition has been demanding the removal of GST on health and life insurance premiums, which attract an 18 per cent rate.

Sitharaman had earlier this month said that tax was levied on insurance premiums even before the imposition of GST, and GST revenues are shared between the Centre and states.

Gowda said the GoM had asked for a break up of changes in tax rates on some items. "What will be the implication of tax rates going up or down on those items," he said.

The other members of the GoM are Kerala Finance Minister KN Balagopal, Uttar Pradesh Finance Minister Suresh Kumar Khanna, Goa Transport Minister Mauvin Godinho, and Rajasthan Medical, and Health Services Minister Gajendra Singh.

The GST Council, in its previous meeting in June, had tasked the GoM to give a broad overview of the work done or a draft report on GST rate rationalisation. It would include the status of the work, aspects covered by the panel so far and work pending before the panel.

The GST Council in its 54th meeting on September 9 will discuss the way forward on rate rationalisation.

The GoM has been tasked with suggesting the required rate rationalisation and correction of the inverted duty structure, with the objective of simplifying the rate structure, reviewing the GST exemption list and enhancing revenues from Goods and Services Tax (GST).

The GoM was originally set up in September 2021, under the then Karnataka Chief Minister Basavaraj Bommai. Under his chairmanship, the panel submitted an interim report to the GST Council in June 2022, proposing changes in tax rates for some goods and services and correction in the inverted duty structure.

Currently, the GST regime has five broad tax slabs of zero, 5, 12, 18, and 28 per cent. A cess is levied over and above the highest 28 per cent rate on luxury and demerit goods.