The GoM on GST rate rationalisation, led by Bihar Deputy Chief Minister Samrat Chaudhary, is considering tax relief on more than 100 items to ease the burden on the common man. West Bengal Finance Minister Chandrima Bhattacharya revealed that the GoM discussed lowering GST on certain goods from 12% to 5%, including bicycles and bottled water.
The next meeting, scheduled for October 20, will further explore these revisions and address rate cuts on medical and pharma-related items currently in the 12% slab.
The GoM is also weighing compensatory measures to offset the potential revenue losses. One option includes raising the GST rate on aerated water and beverages, currently taxed at 28% plus cess. Bhattacharya emphasized that the GoM's discussions aim to balance tax relief for essential items while ensuring revenue neutrality. The GoM will present its recommendations to the GST Council after further deliberations in its October meeting.
Currently, GST operates on a four-tier system framework with slabs at 5%, 12%, 18% and 28%. Bhattacharya pointed out that West Bengal has sought to review one recommendation made at the 23rd GST Council meeting where tax rates on 178 items had been reduced, lowering the 28% slab. The idea is to re-impose some of these items to the higher rate while at the same time cutting general rates down to the 5% slab.
As of 2024, the average tax rate under GST has dropped to 11.56%, prompting a wider discussion on rate rationalisation. This comes in light of the current rate being lower than the revenue-neutral rate of 15.3%. The GoM will focus on striking a balance between tax simplicity and safeguarding revenue collections for states, especially in categories like bicycles and e-cycles, which are essential for the masses.
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