India: Centre denies reports of GST council planning to raise 5% tax slab to 8%

  • The Central Government has categorically denied the media reports claiming that the Goods and Services Tax (GST) Council is planning to raise a 5% tax slab to 8%, said the government sources.
  • The sources confirmed that there is no such proposal from the Council, this news is speculative and there is no truth in it.
  • Currently, GST has a four-tier slab structure of 5%, 12%, 18%, and 28%. Besides, gold and gold jewellery attract a 3% tax.
  • In 2021, GST council formed a Group of Ministers (GoM) on rate rationalisation, headed by Karnataka Chief Minister Basavaraj Bommai, which includes West Bengal Finance Minister Amit Mitra, Kerala Finance Minister K N Balagopal, and Bihar Deputy Chief Minister Tarkishore Prasad.
  • The group was asked to review the exempt goods to expand the tax base, suggest changes to simplify the rate structure, and garner the required resources. The GoM has just met once since its inception to deliberate on the proposed changes to the rate structure.
  • A detailed presentation was made before the Council on changes to the rate structure and its implication for revenues and those suggestions are available with the GoM. These scenarios included raising the threshold slab rate to 8% from 5%, a single 15% levy by merging the 12% and 18% slabs.
  • Sources said that GoM has still not prepared its report on rate rationalisation and it is yet to be submitted to the GST council.
  • The date of the next meeting of the GST council is likely slated for early-May 22, although the date is not confirmed yet as the Union Finance Minister Nirmala Sitharaman, who is also the Chairman of the GST Council, is currently in the USA to attend the Spring Meetings organised by the International Monetary Fund and World Bank.
  • The group is unlikely to take up a proposal to raise the lowest or threshold slab under GST to 8% from 5% now, government sources said.
  • Policymakers now see rising inflation as a serious concern and any rate change exercise will take this factor into consideration. Any rejig in the rates would now be carried out keeping in view these concerns, though the final decision would rest with the GST Council.
  • The last GST council meeting, which was the 46th council meeting was held on 31 Dec 21. Essential items are either exempted or taxed at the lowest slab of 5%, while luxury and demerit items attract the highest tax rate of 28%. On the top of the highest slab, a cess is levied on luxury and demerit goods.

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