Rationalisation of rates of the goods and services tax (GST) may be taken up in the coming fiscal and the government could give an indication towards this in the upcoming Interim Budget.
The Group of Ministers on rate rationalisation of GST was reconstituted in November this year and indications are that the GST Council may take the issue further in the coming fiscal. Highly placed sources however told Business Today that no meeting of the GoM on rate rationalisation has been scheduled as of now.
“There is no intimation of a meeting post the reconstitution of the GoM,” said the source. The GoM may require a fresh member post the Rajasthan assembly elections. Shanti Kumar Dhariwal was the minister for local self government, urban development and housing and law and legal affairs in the previous Rajasthan government and was a member of the GoM.
The expectation is that the exercise may be taken up after the General Elections 2024 but an announcement about this could come in the Interim Budget, scheduled to be presented on February 1.
“Revenue collection from GST has more or less stabilised at over Rs 1.6 lakh crore per month and compliance is improving. It is likely that rate rationalisation may be taken forward in the new fiscal year,” said another person familiar with the development. However, a final report by the committee could take time once the deliberations start.
The reconstituted GoM on GST rate rationalisation includes Karnataka’s revenue minister Krishna Byre Gowda as a member while Uttar Pradesh Finance Minister Suresh Kumar Khanna is the convenor. Other members of the seven member GoM include Goa minister for transport, Panchayati Raj, housing, protocol and legislative affairs Mauvin Godinha, Bihar finance minister Vijay Kumar Chaudhary, West Bengal finance minister Chandrima Chattacharya and Kerala finance minister KN Balagopal.
The current GST regime has five broad rates of zero, 5%, 12%, 18% and 28% as well as a cess that is levied above the highest rate on specified luxury and demerit goods.
The GoM had submitted an interim report in June 2022 recommending changes in tax rates for some goods and services to rationalise the levy.