The Group of Ministers (GoM) on GST rate rationalisation has discussed reducing tax rates on more than 100 items, including lowering taxes on certain goods from 12% to 5%, to provide relief to consumers, West Bengal Finance Minister Chandrima Bhattacharya said on Thursday.
The next meeting of the GoM is scheduled for 20 October, where rationalising taxes on items such as bicycles and bottled water will be part of the discussion.
The six-member GoM, which convened on Wednesday, also considered a potential tax rate cut on medical and pharmaceutical items currently in the 12% tax bracket. This issue will be further discussed in the next meeting.
To offset the revenue losses from these proposed tax cuts, the GoM has explored the possibility of increasing taxes on other goods, including aerated water and beverages, which are currently taxed at 28% GST plus cess.
The current GST structure has four tax slabs—5%, 12%, 18%, and 28%—though the GST law allows tax rates of up to 40% on certain goods and services.
"The average GST rate has dropped to 11.56% in 2024. West Bengal has proposed revisiting the decision made at the 23rd GST Council meeting, which reduced the 28% slab on 178 items. This would help increase revenues while lowering taxes on items for the common man," Bhattacharya told PTI.
The GoM will review its members' views at the 20 October meeting before presenting its recommendations to the GST Council, chaired by the Union Finance Minister and comprising ministers from all states and union territories.
Bhattacharya said essential items used by the public should attract lower taxes, and reducing the tax on food items from 12% to 5% would provide much-needed relief through price reductions.
However, items in the 18% slab, such as hair dryers, curlers, and beauty preparations, could be moved back to the 28% tax bracket.
"There was no discussion on reducing the number of tax slabs. The GoM agreed that the public should get relief, and if tax rates on everyday items are lowered, other means to recover the revenue loss should be explored," Bhattacharya said, adding that states cannot afford a reduction in GST revenue at this time.
On the issue of taxing bicycles, Bhattacharya noted that while bicycles are commonly used by the masses, there are also high-end models. "We need to consider reducing taxes on bicycles used by the general public. The GoM will discuss this further," she said.
Currently, bicycles and their parts and accessories are taxed at 12%, while e-cycles attract a 5% GST rate.
The GoM includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, and Kerala Finance Minister K N Balagopal.
Under GST, essential items are either exempt or taxed at the lowest slab, while luxury and sin goods attract the highest 28% slab plus cess.
The average GST rate has fallen below the revenue-neutral rate of 15.3%, prompting discussions on GST rate rationalisation.
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