With the GST Council expected to meet in June or July, the word is out that rate rationalisation is one of the key issues of the council’s meeting besides the ease of compliance.
Sources privy to the developments have said that the council may have neared consensus that the current 12 per cent tax slab does not hold much relevance and may therefore done away with. Under its plan to rationalise the goods and services tax rates, the council may shift the items falling under the 12 per cent slab to either 5 per cent or 18 per cent slab once the 12 per cent slab has been eliminated.
The proposal to undertake a revenue neutral tax rate rationalisation exercise has been supported by most Union and state government officials, experts, and representatives of Group of Ministries (GoM), said an official aware of the development.
Presently, there are four tax slabs that fall under the GST regime in India – 5 per cent, 12 per cent, 18 per cent, and 28 per cent. Under the 12 per cent tax slab, goods such as condensed milk, caviar and its substitutes prepared from fish eggs, drinking water packed in 20 litre bottles, walkie talkies, tanks and other armoured fighting vehicles, contact lenses, cheese, dates and dried fruits, frozen vegetables, sausages and similar meat products, pasta, jams and jellies, fruit-juice-based drinks, namkeens including bhujiya, curry paste, mayonnaise, tooth powder, feeding bottles, carpets, umbrellas, caps, bicycles, furniture made of cane or wood, pencils, crayons, handbags and shopping bags made of jute or cotton, footwear priced lower than ₹1,000, diagnostic kits, and marble and granite blocks are currently included.
The services included in the 12 per cent tax slab include specified construction work, hotel rooms costing up to ₹7,500 per day, transport of passengers by air in non-economy classes, some types of multimodal transportation, and certain professional, technical, and business services.
The GS Council is the apex decision-making body under the indirect tax regime comprising the Union Finance Minister and Finance Ministers (or senior ministers) of states. The body last met in December, 2024.
Meanwhile, the GoM on rate rationalisation was formed on September 24, 2021, after the decision of the 45th GST Council meeting that took place in Lucknow. Former Karnataka CM Basavaraj S Bommai was its convener.
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