GoM on GST rate rationalisation accepts Centre’s proposal to scrap 12%, 28% slabs

The Group of Ministers (GoM) on Goods and Services Tax (GST) rate rationalisation has accepted the Centre’s proposal to merge the existing four-rate structure into two slabs by scrapping the 12% and 28% rates, Bihar Deputy Chief Minister Samrat Choudhary said on Thursday.

The six-member GoM, chaired by Choudhary, began deliberations on the Centre’s plan to streamline GST by retaining only the 5% and 18% tax slabs, replacing the current four-tier system of 5%, 12%, 18% and 28%.

“Everyone made suggestions over the proposals made by the Centre. Some states have a few observations. This has been referred to the GST Council,” Choudhary told reporters after the meeting.

“We have made recommendations. The GST Council will make a decision over this,” he said.

Choudhary added that the panel had supported both of the Centre’s suggestions. “We have supported the two proposals by the Government of India, of scrapping GST slabs of 12% and 28%,” he noted.

The panel also discussed a separate proposal to exempt GST on individual health and life insurance premiums, currently taxed at 18%.

The GoM includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda and Kerala Finance Minister K N Balagopal.

"Some states demand that states should be compensated for revenue loss upon implementation of the new rate structure. The revenue loss will be calculated," Khanna said.

Amid speculations that the government may tax high-end cars at a special rate of 40%, Bhattacharya said that ultra-luxury cars should attract a levy on top of 40% GST rate.

The recommendations of the GoMs will be placed before the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state finance ministers, at its next meeting in September.

Sitharaman had earlier told the GoM that rationalisation would ensure a “simplified, transparent and growth-oriented tax regime.”