GoM meet today: What's on agenda as Centre pushes 2-slab GST reform plan

Finance Minister Nirmala Sitharaman to explain Centre's plan for two GST slabs of 5 per cent and 18 per cent, with a 40 per cent rate on select goods

Union Finance Minister Nirmala Sitharaman will address a key meeting of the group of state ministers (GoM) in New Delhi on Wednesday, where major reforms to the Goods and Services Tax (GST) structure will be discussed.

 

The Centre has suggested a simpler two-tier GST rate structure of 5 per cent and 18 per cent, while keeping a 40 per cent special rate for a few demerit goods. The proposal seeks to remove the current 12 per cent and 28 per cent slabs, aiming to make goods cheaper for consumers.

 

“The idea is to put forth the Centre’s viewpoint behind the GST reform proposal. Although the Centre is not a member of the GoM, the Union Finance Minister’s presence and her address will give the GoM a better understanding of the thought process,” a source told news agency PTI.   

 

What’s on the agenda

 

The two-day meeting (August 20-21) will be led by Bihar Deputy Chief Minister Samrat Choudhary, the convenor of the six-member panel. Other members include:

• Suresh Kumar Khanna, Finance Minister of Uttar Pradesh

• Gajendra Singh, Health Minister of Rajasthan

• Chandrima Bhattacharya, Finance Minister of West Bengal

• Krishna Byre Gowda, Revenue Minister of Karnataka

• KN Balagopal, Finance Minister of Kerala

 

The proposed system would classify goods into two broad categories:

• Merit goods (5 per cent): Items benefiting the middle class, MSMEs and farmers

• Standard goods (18 per cent): Most other goods and services

 

The highest permissible slab of 40 per cent will be reserved for around 5-7 demerit items, such as pan masala, tobacco, and online gaming.

 

Currently, GST is levied at 5 per cent, 12 per cent, 18 per cent and 28 per cent. If approved by the GoM, the changes will be taken up at the GST Council meeting next month, chaired by FM Sitharaman.   

 

What changes for consumers

 

• Nearly 99 per cent of items in the 12 per cent slab could move to 5 per cent

• About 90 per cent of goods and services in the 28 per cent slab may shift to 18 per cent

 

This restructuring is expected to reduce the tax burden on everyday purchases and lower prices of many goods.

 

Govt mulls revival of anti-profiteering rules

 

The government is also considering bringing back anti-profiteering provisions under GST 2.0. These rules were first introduced in 2017 to ensure that businesses passed on benefits of GST rate cuts and input tax credits (ITC) to consumers. They were implemented through the National Anti-Profiteering Authority (NAA), which was dissolved in December 2022.

 

At present, such cases are handled by the GST Appellate Tribunal (GSTAT) Principal Bench in Delhi, which has all-India jurisdiction. Recently, GSTAT upheld a ruling against a Subway franchise for not passing on GST benefits to consumers.

 

(With agency inputs)